2013 financial statement
TRANSCRIPT
(A free translation of the original in Portuguese)
Eneva S.A.(Publicly held company)Financial statements atDecember 31, 2013and independent auditor's report
In 2013 we consolidated as an operational company, playing an important role in Brazil'selectricity sector. We are now the largest thermal generator in the country.
We started up operations of the Itaqui coal power plants, the second plant of Pecém I, PecémII, and three plants of the Parnaíba Complex. We accordingly closed 2013 with eight venturesin operation, with an installed capacity of around 2.4 GW, in addition to more than 500 MW inconstruction, thereby guaranteeing firm energy for the country.
At the start of the year ENEVA's corporate structure changed, with increasing E.ON its interest,which now shares the control of ENEVA with Eike Batista. As a result of this, the company wasgiven a new name and a new logo. We have embarked on a time of restructuring which will bekey to the company's future success.
We have begun extracting natural gas from the Parnaíba Basin to supply the plants of theParnaíba Complex, by way of Parnaíba Gás Natural, the new name of OGX Maranhão, whichalso has the new partners E.ON and Cambuhy. This new structure guarantees operationalsecurity to continue investing in this groundbreaking project, which integrates the productionof natural gas with energy generation.
Operationla and regulatory challenges throughout 2013 led the company to increase its debt.At the end of the year we overcame another challenge, successfully refinancing our short-termdebt and securing additional financing, which will enable us to implement deleveragemeasures in 2014 and 2015.
We did a lot in 2013 and with the energy and motivation of all, we will make 2014 a year ofnew conquests.
SUSTAINABILITY – EARNINGS RELEASE FOR 4 Q 13
The Company holds sustainability as a core value in its strategy and business operation, and is
systematic and proactive via an integrated vision of adopting the efforts able to balance the financial
return expected by shareholders and collaborators, who guarantee the reliability and effectiveness of its
operations, with environmental protection, occupational health and safety, asset integrity, cultural
diversity and the rational use of natural resources. This value can be seen in the results obtained and
programs in development for internal and external public.
An Integrated Environmental Management System began to be installed in 2013, which establishes
principles and guidelines for planning, developing, controlling, monitoring, and periodically evaluating
sustainability performance, based on methodology recognized in line with the standards ISO
14001:2004 – Environmental Management Systems – Requisites, and OHSAS 18001:2007 – Occupational
Health and Safety Systems - Requisites.
A reduction was observed in the frequency of accidents at subsidiaries, which ranks ENEVA as a high-
performance company in the most important item of the production process, occupational health and
safety. Six years into its life, the Company has exceeded 80 million hours worked with no fatal accidents
involving its own or outsourced staff.
Operating licenses were obtained in 2013 for Pecém II, Parnaíba III and Parnaíba IV amounting to
597MW and preliminary licenses were included in its portfolio of renewable ventures for a further 280
MW at the Ventos Complex.
Last year the Complex continued to develop voluntary initiatives, including:
Lençóis Maranhenses National Park
By way of the cooperation agreement signed in 2008, for the sixth consecutive year ENEVA helped
maintain and make improvements to the Lençóis Maranhenses National Park, which houses a protected
area occupying 155,000 hectares of stunning beaches, dunes, rivers, lakes and mangrove swamps. This
investment is made to implement infrastructure for public visits, environmental education, and the
training of guides and inspectors.
The Healthy Children, Healthy Future project
In partnership with Inmed Brasil and the municipal departments of health and education of Maranhão,
ENEVA is implementing the project “Healthy Children, Healthy Future”. The voluntary initiative
promotes initiatives aimed at sanitation and nutritional education with teachers and students of the
municipal chain of schools around the ventures, and has benefited 12,000 participants.
The commitment to future results through work plans and targets demonstrates that the achievements
obtained are planned and produced based on the competent work of an entire workforce. This
commitment will be evidenced in 2014 through more comprehensive targets aligned with the needs and
expectations of the Company and its shareholders.
ENEVA REPORT – 2013 OVERVIEW
1. Introduction
In general 2013 was a year in which the thermal energy plants were used substantially
to help recover the hydroelectric plants' reservoirs.
The plants driven on oil and biofuel generated more than 131.6% than in 2012, the
thermal and gas plants generated 57.6% more and the coal plants raised generation by 85.9%.
The average PLD was an average R$414/MWh in 2013. Thermoelectric energy generation in
Brazil also led to high System Service Charges (ESS) throughout the year.
The increase in charges is primarily influenced by the entry into operational of all
thermoelectric plants in the country to guarantee security in supplying energy to consumers,
given the low rainfall levels which have resulted in depletion of the reservoirs of hydroelectric
power plants in the south-east, central and western and northeast regions and concerns about
possible energy rationing in Brazil.
In relation to the Company, 2013 saw a number of ventures come into operation,
amounting to a total generating capacity in operation of 2.35GW. The plants driven by
imported coal includes the start-up of commercial operations of Itaqui (360MW) in April 2013,
the second turbine of Pecém I (360MW) in June 2013 and the Pecém II (365 MW) plant in
October 2013. The natural gas plants supplied by onshore resources of Parnaíba Basin came
into operation in 2013: Parnaíba III (176MW) in January, Parnaíba I (676MW) in April and
Parnaíba IV (56MW) in December. The Parnaíba II plant (517MW) is in the stage of being
implemented.
The main headlines in 2013 in the electric sector were Provisional Law 579 and
National Energy Policy Council Resolution 03/2013. Provisional Law 579 was the most
controversial measure since the reformulation of the regulatory framework in 2004, and is
expected to reduce rates by cutting sector charges, contributions from the National Treasury
and diminishing compensation on generation and transmission assets, bringing forward the
renewal of contracts terminating between 2015 and 2017. CNPE Resolution 03/2013
incorporates the risk aversion mechanisms in price formation, and has been well accepted by
the Sector, despite the controversial apportionment of ESS costs between sector agents.
At the end of 2013 Aneel approved the change to the pass-through rules for energy
purchased to bolster the back-up contracts before the commercial entry of the Pecém I, Itaqui
and Parnaíba III plants.
In the auctions that took place in 2013, the maximum price of R$144/MWh
established by the Government for the thermoelectric plant auction meant it was not possible
to contract coal plants.
2. Overview of the Interconnected National Grid System (SIN) in 2013
The thermoelectric output in 2013 was ongoing and high, with an average of more
than 12,000 MW generated. As a consequence the PLD was maintained at a high level, in
addition to an increase in the ESS charges due to the output in addition to the economic merit
order for the purpose of energy security.
Graph 1 – Thermal Energy Generation (MWh)
Source: ONS – National Electric System Operator
In 2013 water levels were lower than the historic average in the period January to
April in the south-east, central and western and northeast subsystems. In the north subsystem
water levels were just higher than the average for this period. This unfavorable hydrological
scenario meant that the south-east, central and western and northeast subsystems were
unable to recover their maximum storage capacity at the end of April, which only the north
region managed to do.
Despite the intensive use of thermal generation, reservoirs reached the lowest levels
in the north-east of Brazil in the last five years (22%), indicating the need for greater
thermoelectric generation in SIN, if not the country will become increasingly exposed to
hydrological variations.
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Source: ONS
Graph 2 - Storage of the subsystems' reservoirs (EAR %)
The PLD amounts in the course of the year were impacted at the start of the year by
the reduction in water levels in the south-east.
Graph 3 – Average PLD in the subsystems (R$/MWh)
Source: CCEE
Graph 4 shows the correlation between ENAs (Natural Energy Feed) in subsystems in
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Graph 4 - Natural Energy Feed (ENA) of the subsystems' reservoirs (% MLT)
Source: ONS
3. New Regulatory Policies
MP 579 was published in 2012, and was only regulated at the start of 2013, being
enacted as Law 12783/2013.
The provisional measure under scrutiny changed a number of structural aspects of the
2004 Brazilian electric sector model, bringing forward the renewal of contracts terminating
between 2015 and 2017, in order to cause an average reduction in the regulated rates of
around 20%. This reduction will take place through a cut in sector charges and lower
compensation on generation and transmission assets.
The sector charges eliminated were: Fuel Consumption Account (CCC) and General
Investment Reserve (RGR). The Energy Development Account (CDE) will be reduced by around
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25% of the current amount, will assume the cost of the programs in the other two accounts
and receive the contribution of around R$3.3 billion a year from the Treasury.
In order to maintain the announced rate discount -- in the midst of a heavy output of
thermal plants - the Government implemented a series of measures, including CNPE
Resolution 03/2013, the main objective of which was to make the PLD provide a more
accurate signaling of the guidelines for introducing risk aversion mechanisms in the computer
programs, incorporating short-term procedures for price formation.
This resolution is also expected to adjust the criteria for planning and better pricing
the hydrological risking contracts by quantity, impacting the price of new energy.
The controversial part of this Resolution is that the ESS will now be appropriated
between all sector agents, whereas it used to only be paid by consumers. The number of
associations have filed claims before the courts against the apportionment of the charges and
obtained injunctions which exclude their members from payment of the selected generation
cost outside the order of merit.
4. Transfer of energy between regions
The electrical limits of energy exchange between sub-grids are of fundamental
importance to the process of the optimization of energy, since they are determining factors for
the definition of operation policies. Given the condition of the reserves, new limits were
established for export from the Southeast and Center-West regions to the North and
Northeast, aiming to establish the frequency of the North/Northeastern grid for contingency
situations.
The hydrological situation in the Northeast (exemplified by the reduction in the level
of the Sobradinho reservoir to 35% of its capacity) led the operator to practice substantial
interchanges in order to recover the levels of this region's reservoirs.
In September 2013 the blackout took place in a number of the country's regions,
which was caused by forest fires in the North-East region of Brazil, which highlights the
system's vulnerability to multiple emergencies. Brazil's electric system is currently operating at
N-1, with a load guarantee in the event just one transmission element fails. However, the
Government is considering upgrading a number of parts of the system to N-2, which will
substantially increase the requirement for investment.
5. Pass-through of Energy to Bolster plant back-up
Due to the delay in the operating start of ENEVA's plan projected for 2012/2013, Aneel
is re-evaluating the pass-through rules for energy purchased to bolster the back-up contracts
before the commercial entry of the plants.
The change in the energy pass-through criteria required the reimbursement to be
based on the current/online cost of the system (ICB Online) in place at the time of the auction.
Table 1 - advancement of the start-up of PPAs
Plants Start New Date
Itaqui Jan/2012 12/21/2012
Pecém I Jan/2012 7/23/2012
Pecém II Jan/2012 6/1/2013
Parnaíba III Jan/2013 4/1/2013
At the end of 2013 Aneel approved Pecém I, Itaqui and Parnaíba III, which for pass-
through purposes should consider the lower of the monthly cost of the back-up replacement
contract and the monthly cost of the CCEARs via availability calculated as if the plant were in
operation. The evaluation of the reimbursement application submitted via ICB online to
Pecém II is pending examination by Aneel.
6. Energy Auctions
In 2013 the Government resumed the energy auctions to increase generation in the
country. A total of four auctions were held to procure new energy. Even if results are not
immediate, because this energy would only enter the system within three to five years, this
demonstrates the Government's concern in increasing generation in the medium term.
In 2013 bidders for coal ventures were also offered certain incentives, such as special
financing conditions and PIS/ Cofins tax adjustments. ENEVA registered the Seival coal venture
(600 MW) in the two A-5 auctions that took place in 2013. However, the ceiling price of
R$144/MWh plus strong dollar valuation meant it is not possible to contract coal plants.
There was major contracting of wind energy at all auctions, raising the concern that
there is no expansion of plants with a firm offer of energy as only the thermal energy plans
and hydroelectric plants with large reservoirs are guaranteeing security in the supply and
minimizing the country's exposure to the poor rainfall.
Reserve Auction/2013 (LER/2013)
After the reserve auction the Ministry of Mines and Energy began adopting the
generation productivity index of P90, IT delivery of 90% of the physical guarantee, with the
former index being P50. This amendment was due to the fact that all the wind sources in
operation are generating less than the physical guarantees. This change resulted in an increase
in the wind energy price, which at the reserve auction negotiated an average sale price of
R$11051/MWh. At the A-5 auction held in December 2012 the source reached an average
price of R$87.94/MWh.
A-3/2013 Auction
The wind source dominated the A-3 energy auction, and is the only source to sell
energy in the competition, thereby raising the number of new wind farm projects contracted
at public auctions in 2013 to around an installed capacity of 2.4 GW.
The energy from the wind parks was sold at an average price of R$124.43/MWh.
Raising the price ceiling for the source compared with LER/2013 reflects the difference
between the contracting conditions and higher costs, especially transferring the transmission
risk to companies. These conditions reduced the competitiveness of the enrolled projects,
including ENEVA's.
1st A-5/2013 Auction
The 1st A-5/2013 Auction resulted in the contracting of 19 generation ventures, with
an overall installed capacity of 1,265MW. The average Auction price was R$124.97/MWh.
The auction saw a total of 1,599.5MW being negotiated, which made it possible to
increase installed capacity by 3,507.351MW. The average auction price was R$109.93/MWh.
The Sinop hydroelectric plant (400 MW) was awarded to the CES Consortium –
consisting of the companies Alupar, Chesf and Eletronorte – at a final price of R$109.40/MWh.
Table 2 - Consolidated Results of the 1st A-5/2013 bidding round
SourceContracted
ventures
Installed capacity
(MW)
Physical
Guaranty
(Average MW)
Average price
(R$/MWh)
UHE Sinop 1 400 239.8 109.4
UHE Salto Apiacás 1 45 22.9 119.97
SHP 8 173.5 92.3 127.01
Biomass (woodchippings) 2 300 241.2 136.69
Biomass (sugarcane bagasse) 7 347 152.5 133.57
TOTAL 19 1,265.50 748.7 124.97
Source: CCEE
2nd A-5/2013 Auction
UHE São Manoel/PA (700 MW) was auctioned at the price of R$83.49/MWh,
representing negative goodwill of 22% over the initial price R$107/MWh.
Most of the ventures contracted - 97 - were windfarms.
The auction also saw 16 small hydroelectric power stations be sold, and five biomass
thermal energy plans (woodchippings and sugarcane bagasse).
Table 3 - Consolidated Results of the 2nd A-5/2013 bidding round
SourceContracted
ventures
Installed capacity
(MW)
Physical
Guaranty
(Average MW)
Average price
(R$/MWh)
UHE São Manoel 1 700 421.7 83.49
SHP 16 307.7 148.5 137.35
Wind 97 2,337.8 1,083.4 119.03
Biomass (woodchippings) 4 145 79.6 133.38
Biomass (sugarcane bagasse) 1 16.8 14.9 135.49
TOTAL 119 3,507.3 1,748.1 109.93
Source: CCEE
Note the lack of thermal electric generation and the modest contracting of
hydroelectric plants with reservoirs in this auction, which has not strengthened the security of
the future energy supply. It is worth noting that the profile of the contracting in the new
energy bidding rounds has afforded a greater dependence for supply on climate conditions.
7. Uploading and energy supply (2013)
Electricity consumption in 2013 was 60.07GWh, an increase of 2.8% over 2012.
The increase in energy consumption between 2012 and 2013 was due to additional
demand driven by GDP growth in 2013 (2.3%).
Table 4 - Growth of uploading and demand (SIN)
YearLoad (Average
GW)Demand (MW)
2012 58.46 76,261.0
2013 60.07 78,982.0
Growth 2.8% 3.6%
Source: ONS
ENEVA's contribution to the energy security of the SIN
ENEVA's energy generation plants will provide the SIN with around 2,810 MW of
installed capacity and a 2,300 MW average in terms of real guarantee. On top of being
competitive in economic terms, the energy added in by ENEVA will reduce the supply’s
dependence on climate conditions, contributing to the increased security of energy in the SIN.
The table below explains the portfolio of ENEVA's plants.
Table 5 - Portfolio of ENEVA Energia
Plants Capacity (MW)Energy
(average MW)Entry
Pecém I 720.0 631.0 2012/2013
Pecém II 365.0 294.7 2013
Itaqui 360.0 332.7 2013
Parnaíba II 518.8 470.7 2014
Parnaíba I 675.2 450.0 2013
Parnaíba III 176.2 101.6 2013
Parnaíba IV 56.3 - 2013
Itaqui 23.0 21.0 2008
Solar Tauá 1 - 2011
Total 2,896 2,302
(A free translation of the original in Portuguese)
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2
Independent auditor's report
To the Board of Directors and ShareholdersEneva S.A.
We have audited the accompanying financial statements of Eneva S.A. ("Company" or "ParentCompany"), which comprise the balance sheet as at December 31, 2013 and the statements ofoperations, comprehensive loss, changes in equity and cash flows for the year then ended, and asummary of significant accounting policies and other explanatory information.
We have also audited the accompanying consolidated financial statements of Eneva S.A. and itssubsidiaries ("Consolidated"), which comprise the consolidated balance sheet as at December 31, 2013and the consolidated statements of operations, comprehensive loss, changes in equity and cash flowsfor the year then ended, and a summary of significant accounting policies and other explanatoryinformation.
Management's responsibilityfor the financial statements
Management is responsible for the preparation and fair presentation of the parent company financialstatements in accordance with accounting practices adopted in Brazil, and for the consolidatedfinancial statements in accordance with the International Financial Reporting Standards (IFRS) issuedby the International Accounting Standards Board (IASB) and accounting practices adopted in Brazil,and for such internal control as management determines is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with Brazilian and International Standards on Auditing. Thosestandards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror.
Eneva S.A.
3
In making those risk assessments, the auditor considers internal control relevant to the entity'spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
Opinion on the parent companyfinancial statements
In our opinion, the parent company financial statements referred to above present fairly, in allmaterial respects, the financial position of Eneva S.A. as at December 31, 2013, and its financialperformance and cash flows for the year then ended, in accordance with accounting practices adoptedin Brazil.
Opinion on the consolidatedfinancial statements
In our opinion, the consolidated financial statements referred to above present fairly, in all materialrespects, the financial position of Eneva S.A. and its subsidiaries as at December 31, 2013, and theirfinancial performance and cash flows for the year then ended, in accordance with the InternationalFinancial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB)and the accounting practices adopted in Brazil.
Emphasis of matter
Use of the equity method and themaintenance of deferred assets
As discussed in Note 3 to these financial statements, the parent company financial statements havebeen prepared in accordance with accounting practices adopted in Brazil. In the case of Eneva S.A.,these practices differ from IFRS applicable to separate financial statements only in relation to themeasurement of investments in subsidiaries, associates and jointly-controlled entities based on equityaccounting, while IFRS requires measurement based on cost or fair value, and the maintenance of thebalances of deferred charges as at December 31, 2008, which are being amortized. Our opinion is notqualified in respect of these matters.
Going concern
We draw attention to Note 1 to these financial statements, which states that, as at December 31, 2013,the Company has an accumulated deficit of R$ 2,379,303 thousand and an excess of current liabilitiesover current assets in the parent company and consolidated financial statements amounting toR$ 1,438,768 thousand and R$ 2,231,017 thousand, respectively. This, along with other matters asdescribed in Note 1, indicates the existence of a material uncertainty about the ability of the Companyto continue as a going concern, which will depend on the success of current and future operations and
Eneva S.A.
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on the financial support of stockholders, in addition to the extension of the maturities of third-partyborrowings. No adjustments arising from these uncertainties were included in the financialstatements. Our opinion is not qualified in respect of this matter.
Other matters
Prior-year financial statements audited byanother firm of independent auditors
The original financial statements of the Company for the year ended December 31, 2012, preparedbefore the consideration of the adjustments described in Note 4.5.21, were audited by another firm ofindependent auditors, whose report, dated May 23, 2013, expressed an unmodified opinion on thosestatements. As part of our audit of the financial statements for 2013, we also have audited theadjustments described in Note 4.5.21 that were made to restate the financial statements for 2012,presented for purpose of comparison. In our opinion, these adjustments are appropriate and werecorrectly recorded. We were not engaged to audit, review or apply any other procedures to theCompany's financial statements for 2012 and, therefore, we do not express any opinion or any form ofassurance on the financial statements for 2012 taken as a whole.
Supplementary information -Statement of value added
We have also audited the parent company and consolidated statements of value added for the yearended December 31, 2013, which are the responsibility of the Company's management. Thepresentation of this statement is required by the Brazilian corporate legislation for listed companies,but it is considered supplementary information for IFRS. These statements were subject to the sameaudit procedures described above and, in our opinion, are fairly presented, in all material respects, inrelation to the financial statements taken as a whole.
Rio de Janeiro, March 27, 2014
PricewaterhouseCoopersAuditores IndependentesCRC 2SP000160/O-5 "F" RJ
Guilherme Naves ValleContador CRC 1MG070614/O-5 "S" RJ
Eneva S.A.(Publicly held company)
Balance sheet at December 31In thousands of reais (A free translation of the original in Portuguese)
1 of 98
(Re-presented) (Re-presented)
Note 2013 2012 2011 2013 2012 2011
Assets
Current
Cash and cash equivalents 6 110,156 206,263 960,257 277,582 519,277 1,380,151
Securities 7 - - - - 3,441 9,437
Accounts receivable 9 - - - 294,396 21,345 21,480
Subsidies receivable - Fuel Consumption Account 9 - - - 30,802 17,561 4,828
Inventories 10 - - - 78,376 142,687 58,190
Prepaid expenses - - 151 9,825 19,351 13,272
Recoverable taxes 11 25,701 22,068 29,385 47,651 37,410 35,126
Gain on derivatives 19 4,171 3,018 19,289 4,171 3,018 36,445
Other advances 1,175 820 2,140 5,001 1,783 8,416
Secured deposits 8 38 35 56,727 38 35 61,844
Dividends receivable 12 - 2,040 2,362 - - -
Other accounts receivable - - - - - 38
141,241 234,244 1,070,310 747,842 765,908 1,629,227
Non-current
Long-term
Prepaid expenses 841 841 - 2,905 8,494 1,964
Secured deposits 8 - 102,649 55 118,606 135,648 54,148
Subsidies receivable - Fuel Consumption Account 9 - - - - 24,617 24,617
Recoverable taxes 11 7,215 9,598 35,585 14,614 24,034 82,689
Deferred income and social contribution taxes 11 - 114,400 88,680 302,327 305,548 248,862
Loans with subsidiaries and joint ventures 15 909,327 505,976 29,883 191,968 134,926 680
Accounts receivable from other related parties 15 217,337 1,134 2,796 218,680 1,134 8,436
Accounts receivable from subsidiaries and joint ventures 15 123,005 16,364 - 117,372 6,793 -
AFAC to subsidiaries and joint ventures 15 206,678 419,426 162,758 150 12,425 -
Embedded derivatives 17 0 479 - 0 479 411,121
Other accounts receivable 2 - - 60 - -
1,464,405 1,170,867 319,756 966,682 654,098 832,516
Investments 12 3,130,978 2,215,107 1,538,331 941,853 833,955 431,695
Property, plant and equipment 13 12,634 19,343 21,641 6,819,454 5,570,399 3,962,979
Intangible assets 14 2,727 2,920 1,739 213,381 215,236 266,954
4,751,985 3,642,481 2,951,777 9,689,212 8,039,596 7,123,370
Parent Company Consolidated
Eneva S.A.(Publicly held company)
Balance sheet at December 31In thousands of reais (continued)
The accompanying notes are an integral part of these financial statements.
2 of 98
(Re-presented) (Re-presented)
Note 2013 2012 2011 2013 2012 2011
Liabilities
Current
Trade payables 3,473 3,849 1,298 331,216 115,261 154,476
Borrowings and financing 16 1,562,211 924,352 106,286 2,408,142 1,819,974 994,608
Debts with associated companies 15 - 3,859 724 - - -
Debts with controlling company 15 - - - - 26,783 -
Debts with other related parties 15 - 2,664 3,210 - 3,989 3,697
Debentures 17 112 111 30,463 112 111 30,463
Taxes and contributions payable 18 709 402 100 45,934 7,241 17,939
Social and labor obligations 8,424 3,288 4,386 16,770 9,863 16,246
Losses on derivative transactions 19 - - - - 22,951 27,580
Contractual retention 13 - - - 84,789 77,374 127,965
Profit sharing 4,990 8,726 11,242 8,148 20,633 19,177
Dividends payable 12 - - - - 1,960 2,269
Other liabilities 91 91 75 83,748 3,325 48,603
1,580,010 947,342 157,784 2,978,859 2,109,465 1,443,022
Non-current
Loans and financing 16 655,417 102,175 - 3,802,378 3,104,806 2,326,101
Debts to other related parties 15 34,489 - 3 307,720 430 -
Debentures 17 5,239 4,954 1,403,152 5,239 4,954 1,403,152
Embedded derivatives 17 - - 62,003 - - 62,003
Losses on derivative transactions 19 - - - - 94,797 502,723
Provision for unsecured liabilities 12 8,087 18,418 11,035 9,286 19,840 -
Deferred income and social contribution taxes 11 - - - 9,591 2,048 13,239
Provision for dismantlement 13 - - - 2,266 2,118 1,946
Other provisions - - - - - 1,026
703,232 125,547 1,476,193 4,136,480 3,228,993 4,310,190
Shareholders' equity
Capital 21 4,532,313 3,731,734 2,042,014 4,532,313 3,731,734 2,042,014
Capital reserve 23 350,514 321,904 274,625 350,514 321,904 274,625
Equity appraisal adjustments 21 (53,284) (119,067) (71,670) (53,284) (119,067) (71,670)
Accumulated deficit 21 (2,360,800) (1,364,979) (927,169) (2,379,303) (1,384,971) (970,897)
Shareholders' equity attributable to controlling shareholders 2,468,743 2,569,592 1,317,799 2,450,240 2,549,600 1,274,072
Minority interests - - - 123,633 151,538 96,086
Total shareholders’ equity 2,468,743 2,569,592 1,317,799 2,573,873 2,701,139 1,370,158
4,751,985 3,642,481 2,951,777 9,689,212 8,039,596 7,123,370
Parent Company Consolidated
Eneva S.A.(Publicly held company)
Statement of operationsYears ended December 31In thousands of reais (A free translation of the original in Portuguese)
The accompanying notes are an integral part of these financial statements.
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Note 2013 2012 2013 2012
(Re-presented)
Revenue from goods sold and services provided 24 - - 1,438,831 48,786
Cost of goods and/or services sold 25 - - (1,507,047) (50,949)
Gross profit - - (68,216) (2,163)
Operating income/expenses 25 (607,282) (398,826) (358,957) (404,708)
General and administrative (123,701) (154,317) (167,261) (231,026)
Personnel and management (67,579) (78,347) (79,762) (111,440)
Other expenses (7,908) (6,391) (12,323) (12,411)
Outsourced services (40,401) (59,983) (64,803) (92,139)
Depreciation and amortization (2,280) (1,535) (3,125) (2,788)
Leasing and rentals (5,533) (8,061) (7,248) (12,248)
Other operating revenue 1,096 1 4,424 1,208
Other operating expenses (15,498) (14,390) (43,108) (16,787)
Unsecured liability (8,272) (14,362) (7,717) (14,671)
Losses on the sale of assets (7,229) (30) (7,231) (879)
Provision for investment losses 3 2 (23) (1,237)
Write off CCC Benefit - - (24,617)
Others - - (3,520) -
Equity in income of subsidiaries (469,179) (230,120) (153,012) (158,103)
Result before financial income/costs andtaxes on income (607,282) (398,826) (427,173) (406,871)
Financial result 26 (220,774) (62,096) (506,096) (90,459)
Financial income 112,823 142,842 88,513 (249,822)
Exchange variance-gain 12,528 3,205 15,346 25,086
Fair value of debentures (479) 62,482 (479) 62,482
Interest-income bank deposits 94,632 65,324 63,707 76,599
Derivative financial instruments 2,728 5,592 2,728 (422,684)
Other financial income 3,414 6,239 7,211 8,695
Financial costs (333,596) (204,938) (594,609) 159,363
Exchange variance loss (27,625) (1,561) (33,745) (16,479)
Derivative financial instruments (6,142) (4,156) (3,339) 398,638
Debenture interest/cost (786) (130,864) (786) (130,863)
Fair value of debentures - - - -
Debt charges (147,857) (46,230) (364,832) (47,248)
Financial advisory consultant (82,372) - (123,093) -
Other financial expenses (68,814) (22,127) (68,814) (44,685)
Result before taxes on net income (828,055) (460,922) (933,269) (497,330)
Income and social contribution taxes on profit 18 (114,400) 25,720 (11,152) 62,876
Current - - (3,744) (1,921)
Deferred charges (114,400) 25,720 (7,408) 64,797
Net result for the year (942,455) (435,202) (944,421) (434,454)
- -
Loss for the year (942,455) (435,202) (944,421) (434,454)
- -
Attributed to Partners of the Parent Company (942,455) (435,202) (942,455) (435,202)
Attributed to Minority Partners - - (1,966) 748
- -
Loss per share - -
Basic and diluted loss per share (R$) 22 (3.51822) (1.66578) (3.52556) (0.75263)
Parent Company Consolidated
Eneva S.A.(Publicly held company)
Statement of comprehensive lossYears ended December 31In thousands of reais (A free translation of the original in Portuguese)
The accompanying notes are an integral part of these financial statements.
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(Re-presented)
1/1/2013 to
12/31/2013
1/1/2012 to
12/31/2012
1/1/2013 to
12/31/2013
1/1/2012 to
12/31/2012
Loss for the year (942,455) (435,202) (944,421) (434,454)
Accumulated Translation Adjustments (54,404) (43,260) (54,404) (43,260)
Equity Valuation Adjustments: (7,510) (4,137) (7,510) (4,137)
Effective portion of the changes in fair value of cash
flow hedges - hedge accounting(11,379) (6,268) (11,379) (6,268)
Deferred income and social contribution taxes - hedge
accounting3,869 2,131 3,869 2,131
Total comprehensive loss (1,004,369) (482,599) (1,006,335) (481,851)
Comprehensive loss for the year (1,004,369) (482,599) (1,006,335) (481,851)
Non-controlling shareholders - - (1,966) 748
Controlling shareholders (1,004,369) (482,599) (1,004,369) (482,599)
Total comprehensive loss (1,004,369) (482,599) (1,006,335) (481,851)
Parent Company Consolidated
Eneva S.A.(Publicly held company)
Statement of changes in equityIn thousands of reais (A free translation of the original in Portuguese)
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Balance at December 31, 2011 Note 2,042,014 274,625 - (71,670) (927,169) 1,317,800
(Re-presented)
Loss for the year - - - - (435,202) (435,202)
Other comprehensive loss:
Translation adjustment in the year 12 - - - (32,439) - (32,439)
Financial instrument adjustments 18 - - - (4,137) - (4,137)
Transactions with shareholders:
Capital increase 20 2,431,907 - - - - 2,431,907
Stock options granted by the Company 22 - - - - - -
Stock options granted by the controlling shareholder 22 - 47,279 - - - 47,279
Adjustment deferred charges - JV - - - - (5,453) (5,453)
Adjustment Spin-off CCX Carvão - Colombia (742,187) - - (10,821) 2,845 (750,163)
Balance at December 31, 2012 3,731,734 321,904 - (119,067) (1,364,979) 2,569,592
(Re-presented)
Loss for the year - - - - (942,455) (942,455)
Other comprehensive income:
Translation adjustment in the year 12 - - - 54,404 (53,366) 1,038
Financial instrument adjustments 18 - - - 11,379 - 11,379
Transactions with shareholders:
Capital increase 20 800,579 - - - - 800,579
Stock options granted by the Company 22 - - - - - -
Stock options granted by the controlling shareholder 22 - 28,610 - - - 28,610
Adjustment deferred charges - JV - -
Adjustment Spin-off CCX Carvão - Colombia - - - - - -
Balance at December 31, 2013 4,532,313 350,514 - (53,284) (2,360,800) 2,468,743
Parent Company
Paid-in share
capital
Capital Reserve and
Options Awarded
Revenue
Reserves
Other
Comprehensive
income (loss)
Accumulated
deficit
Total
shareholders’
equity
Eneva S.A.(Publicly held company)
Statement of changes in equityIn thousands of reais (continued)
The accompanying notes are an integral part of these financial statements.
6 of 98
Balance at December 31, 2011 Note 2,042,014 274,625 (71,670) (970,896) 1,274,073 96,086 1,370,159(Re-presented)
Profit (loss) for the year: - - - (435,202) (435,202) 748 (434,454)
Other comprehensive income (loss):
Translation adjustment in the year 12 - - (43,260) 658 (42,602) - (42,602)
Financial instrument adjustments 18 - - (4,137) - (4,137) - (4,137)
Minority Interests 20 - - - - - 54,704 54,704
Capital Transactions with Partners:
Capital increase 20 1,689,720 1,689,720 - 1,689,720
Stock options granted by the Company 22 - - - - - - -
Stock options granted by the controlling shareholder 22 - 47,279 - - 47,279 47,279
Adjustment Spin-off CCX Carvão - Colombia 12 - - - 2,845 2,845 - 2,845
Deferred asset adjustment - - - 17,624 17,624 17,624
Balance at December 31, 2012 3,731,734 321,904 (119,067) (1,384,971) 2,549,600 151,538 2,701,138(Re-presented)
Loss for the year: - - - (942,455) (942,455) (1,966) (944,421)
Other comprehensive income:
Translation adjustment in the year 12 - - 54,404 (53,366) 1,038 - 1,038
Financial instrument adjustments 18 - - 11,379 - 11,379 - 11,379
Minority Interests 20 - - - - - (25,938) (25,938)
Capital transactions with partners:
Capital increase 20 800,579 800,579 - 800,579
Stock options granted by the Company 22 - - - - - - -
Stock options granted by the controlling shareholder 22 - 28,610 - - 28,610 28,610
Adjustment Spin-off CCX Carvão - Colombia 12 - - - - - - -
Deferred asset adjustment - - - 1,489 1,489 1,489
Balance at December 31, 2013 4,532,313 350,514 (53,284) (2,379,303) 2,450,240 123,634 2,573,874
Consolidated
Paid-in share
capital
Capital Reserve and
Options Awarded
Other
Comprehensive
income (loss)
Accumulated
deficit
Total
shareholders’
equity
Minority
interests
Total
shareholders’
equity
Eneva S.A.(Publicly held company)
Statement of cash flowsYears ended December 31In thousands of reais (A free translation of the original in Portuguese)
The accompanying notes are an integral part of these financial statements.
7 of 98
(Re-presented)
12/31/2013 12/31/2012 12/31/2013 12/31/2012
Cash flows from operating activitiesLoss for the year before income taxes (828,055) (460,922) (933,269) (497,323)
Depreciation and amortization 2,280 1,535 146,539 8,811Operations with derivative financial instruments 3,414 (4,031) 611 24,046Stock options awarded 28,610 47,279 28,610 47,279Provision for dismantlement - - 149 -Equity in income of subsidiaries 469,179 230,120 153,012 158,103Provision for unsecured liabilities 8,272 14,363 7,717 14,671Provision for investment losses (3) (2) 23 1,237Debenture interest/cost 786 130,864 786 130,864Embedded derivatives 479 (62,482) 479 (62,482)Interest on loans and related parties 147,857 46,230 364,832 47,248Write-off CCC benefit 24,617Others 7,224 - -
(159,957) (57,045) (205,894) (127,546)
Changes in assets and liabilities
Other advances (359) 1,318 (3,218) 6,633Prepaid expenses 0 (635) 15,115 (12,609)Accounts receivable - - (273,051) 135Taxes recoverable/deferred (1,249) 33,304 (821) 56,371Inventory - - 64,311 (84,497)Taxes and contributions 307 302 38,693 (10,697)Trade payables (375) 2,551 215,956 (39,216)Provisions and payroll charges 5,136 (1,098) 6,908 (6,266)Accounts payable 0 16 80,423 (45,396)CCC subsidies receivable - - (13,241) (12,732)Debts/credits with related parties (275,232) (6,407) (24,824) 1,231Payment of debt charges (144,091) (12,556) (360,199) (150,795)Other assets and liabilities (21,299) (9,496) (51,027) (30,284)Cash effect spin-off of E.On - - - -Cash effect Spin-off CCX Carvão da Colômbia - - - -
(437,162) 7,299 (304,975) (328,122)
Net cash used in operating activities (597,119) (49,746) (510,869) (455,668)
Cash flows from investment activitiesAcquisition of PPE and intangible assets (2,602) (417) (1,275,962) (1,159,848)Capital increase in investments (1,180,570) (1,213,568) (260,087) (537,456)Securities - - 3,440 5,996Debt with related parties (403,351) (481,803) (57,042) (134,245)Dividends receivable 2,040 322 - (310)Secured deposits 102,647 (45,958) 17,040 (19,691)
Net cash used in investment activities (1,481,836) (1,741,423) (1,572,611) (1,845,553)
Cash flows from financing activities
Funding of borrowings and financing 2,117,335 886,567 2,562,932 2,064,982
Payment of principal (930,000) (1,399,752) (762,889)
Gain (loss) on settled financial instruments (4,567) 20,302 (119,512) 7,948Capital increase 800,579 2,431,907 800,579 1,689,720Dividends payable - - (1,961)Adjustment Spin-off CCX Carvão da Colômbia - (742,187) - -Debenture settlement (500) (1,559,414) (500) (1,559,414)
Net cash provided by (used in) financing activities 1,982,847 1,037,175 1,841,786 1,440,347
Increase/(decrease) in cash and cash equivalents (96,107) (753,995) (241,694) (860,874)
Increase (decrease) in cash and cash equivalents
At the beginning of the year 206,263 960,258 519,277 1,380,151At the end of the year 110,156 206,263 277,583 519,277
(96,107) (753,995) (241,694) (860,874)
Parent Company Consolidated
Adjustments to reconcile loss to cash flows from operating activities:
Eneva S.A.(Publicly held company)
Statement of value addedYears ended December 31In thousands of reais (A free translation of the original in Portuguese)
The accompanying notes are an integral part of these financial statements.
8 of 98
(Re-presented)
12/31/2013 12/31/2012 12/31/2013 12/31/2012
Revenue - - 2,686,031 1,604,487
Sales of goods, products and services - - 1,438,831 48,786
Revenue relating to construction of company assets - - 1,247,200 1,555,701
Consumables acquired from third parties (including ICMS and IPI) (45,220) (65,848) (1,213,964) (142,567)
Material, energy, outsourced services and others (45,220) (65,848) (1,213,964) (142,567)
Gross Value Added (45,220) (65,848) 1,472,067 1,461,920
(2,280) (1,535) (146,539) (8,811)
Depreciation, Amortization and Depletion (2,280) (1,535) (146,539) (8,811)
Net Value Added Produced (47,500) (67,383) 1,325,528 1,453,109
Transferred Value Added (377,153) (104,845) (94,788) (449,783)
Equity in income of subsidiaries (469,179) (230,120) (153,012) (158,103)
Financial income 100,295 139,637 73,167 (274,909)
Others (8,269) (14,361) (14,943) (16,771)
Derivative financial instruments - - - -
Provision for investment devaluation 3 2 (23) (1,237)
Provision for unsecured liabilities (8,272) (14,363) (7,717) (14,672)
Losses on the sale of assets - - (7,203) (861)
Total Value Added to be Distributed (424,653) (172,227) 1,230,740 1,003,326
Distribution of value added (424,653) (172,227) 1,202,601 1,003,325
Personnel 67,579 78,346 120,553 115,441
Direct remuneration 46,638 57,788 61,977 64,803
Benefits 11,487 13,446 33,971 33,279
FGTS and Contributions 9,454 7,112 24,605 17,359
Others - - - -
Taxes, Duties and Contributions 117,004 (25,624) 14,411 (61,959)
Federal 117,004 (25,624) 14,411 (61,959)
State
Capital remuneration of third parties 333,219 210,253 2,012,058 1,384,297
Interest 786 130,863 786 130,863
Rents 5,533 8,061 172,152 13,046
Others 326,900 71,329 1,839,120 1,240,388
Losses on derivative transactions 6,142 1,561 3,339 (398,638)
Advances to suppliers - - 1,247,200 1,555,701
Insurance 486 430 17,841 1,199
Exchange variance 15,097 952 18,399 (8,607)
Financial Costs 305,175 68,386 552,342 90,734
Capital remuneration (942,455) (435,202) (944,421) (434,454)
Loss for the year attributed to controlling shareholders (942,455) (435,202) (942,455) (435,202)
Loss for the year attributed to non-controlling shareholders - - (1,966) 748
Parent Company Consolidated
(A free translation of the original in Portuguese)
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
9 of 98
1 Reporting entity
MPX Energia S.A. ("Company") was founded on April 25, 2001 and is headquartered in Rio deJaneiro. The Extraordinary General Meeting held on September 11, 2013 approved the decision tochange the Company's name to Eneva S.A.
Its core activity is the generation of electricity through the development of a diversified portfolio ofsources, including mineral coal, natural gas and renewable sources. The Company has a diversifiedportfolio of projects, including thermal power plants in Brazil, in addition to renewable energyprojects, such as solar and wind energy. In order to integrate its operations, the Company is also ashareholder in a natural gas production and exploration project in Brazil, which supplies gas toplants built by the company in Maranhão.
The Company participates as a quotaholder or shareholder of the companies that implement theseprojects and certain projects will be implemented in partnership with other parties in the energysector. These projects were primarily funded through funds obtained under the Company's publicshare offering made on December 14, 2007 and January 11, 2008 (supplementary batch), amountingto R$ 2,035,410, in addition to financing and the issuance of 21,735,744 convertible debentures onJune 15, 2011 amounting to R$ 1,376,527. On May 24, 2012, 21,653,300 debentures were convertedgenerating the issuance of 33,255,219 new shares, as a result of the corporate reorganizationimplemented by the Company.
On March 28, 2013 the controlling shareholder of MPX Energia S.A., Mr. Eike Fuhrken Batista,entered into an investment agreement with E.ON SE consisting of the following events:
(a) On May 29, 2013 E.ON acquired Company shares held by Eike Batista accounting for approximately24.5% of the share capital.
(b) On the date the shares were acquired, E.ON and Eike Batista entered into a new shareholders'agreement, which regulated the exercising of voting rights and restrictions on the transfer of sharesheld by them.
(c) In August 2013 a private capital increase was concluded of approximately R$ 800 million, with asubscription price fixed at R$ 6.45 per share.
(d) The shareholders will subsequently be asked to approve the acquisition by the Company at equityvalue of ENEVA Participações S.A., a joint-venture between the Company and EON ("JV").
As shown in the table below, on December 31, 2013 the economic group includes the Company andits equity interests in associated companies, direct and indirect subsidiaries, joint ventures and theMultimercado MPX 63 investment fund. The pre-operational companies are (for further detailsabout the subsidiaries see Note 12):
Parnaíba Geração de Energia S.A.; Porto do Pecém Geração de Energia S.A.; Pecém II Geração de Energia S.A.; Itaqui Geração de Energia S.A.; Amapari Energia S.A.;
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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ENEVA Comercializadora de Energia Ltda., ENEVA Comercializadora de Combustíveis Ltda., Tauá Geração de Energia Ltda; Parnaíba III Geração de Energia S.A.; Parnaíba IV Geração de Energia S.A..
* Joint subsidiary.** Associated company.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
11 of 98
Directly or by way of its subsidiaries, joint subsidiaries and associated companies, the Company hasbeen making the investments required to finalize the ventures in its portfolio and subsequently beginthe commercial operation of the respective enterprises.
The Company took out a short-term debt to finance its operations in 2012 and 2013. Theconsolidated loans maturing in the next 12 months can be summarized as follows, from December31, 2013:
Between 6 and 9 months: R$ 101 million Between 9 and 12 months: R$ 1,433 million
The short-term debts outstanding in December 2013 were taken out to finance part of theinvestments made and to meet working capital requirements. The Company also is working topartially settle and roll forward its short-term debts to the long term and is mainly considering thefollowing events in its business plan:
Long-term financing for Parnaíba II in 2014 of R$ 960 million
Long-term financing for Parnaíba III and IV of R$ 270 million
Possibility of re-leveraging the Pecém II Geração de Energia and Itaqui Geração de Energia S.A.ventures in an operation through the issue of debentures of R$ 650 million
Lengthening the short-term debt of the Parnaíba Geração de Energia venture in operation by atotal of R$ 125 million
In addition to the re-leveraging of certain projects described above, the Company is analyzingpotential measures to bolster the capital structure and create the means necessary to permit asubstantial reduction in its leverage.
2 Licenses and permits
ENEVA is committed to obtaining all the legal licenses and permits required for each of its facilitiesand activities. The Company and its investees have the following environmental licenses and permitsat December 31, 2013:
Held by Ventures Licenses Expiry
ITAQUI GERAÇÃO DE ENERGIA S.A. UTE PORTO DO ITAQUI LO 1,101/2012 10.26.2017TRANSMISSION LINE LO 1,061/2011 12.16.2017
PORTO DO PECÉM GERAÇÃO DE ENERGIA S.A. UTE PORTO DO PECEM I LO 1,062/2012 12.28.2015PECEM I TRANSMISSION LINE LO 889/2012 9.26.2015
PECÉM II GERAÇÃO DE ENERGIA S.A. UTE PORTO DO PECÉM II LO 09/2013 2.8.2016PECEM II TRANSMISSION LINE LO 108/2013 7.17.2016
AMAPARI ENERGIA S.A. UTE SERRA DO NAVIO (including TL) LO 172/2013 3.25.2016TAUÁ GERAÇÃO DE ENERGIA LTDA. USINA SOLAR TAUÁ 1MW - (including TL) LO 133/2012* 2.28.2014
USINA SOLAR TAUÁ 4MW LI 15/2012* 3.5.2014USINA SOLAR TAUÁ (45MW) LP 253/2012 8.15.2015
PARNAÍBA GERAÇÃO DE ENERGIA S.A. MARANHÃO IV AND V LO 559/2012 12.20.2016PARNAÍBA II GERAÇÃO DE ENERGIA S.A. MARANHÃO III LI 274/2011* 12.27.2013PARNAÍBA GERAÇÃO DE ENERGIA S.A. MARANHÃO IV AND V (cycle closure) LI 273/2011* 12.5.2013ENEVA S.A. MCE NOVA VENECIA 2 LO 336/2013 9.23.2017ENEVA S.A. UTE PARNAIBA I LI 111/2012* 5.9.2013ENEVA S.A. UTE PARNAÍBA II LI 003/12* 11.11.2013PARNAÍBA IV GERAÇÃO DE ENERGIA S.A. PARNAÍBA IV LO 415/2013 11.25.2017
UTE PORTO DO AÇU II LP IN 15964* 3.1.2013TRANSMISSION LINE LI IN 019365 4.24.2015
AÇU III GERAÇÃO DE ENERGIA LTDA. EÓLICA MARAVILHA LI IN 000208* 5.22.2012EÓLICA MUNDÉUS LI IN 000207* 5.22.2012
ENEVA S.A. MPX SUL TPP LP 332/2009* 12.22.2012SUL GERAÇÃO DE ENERGIA LTDA. BARRAGEM MPX SUL LP 601/2010* 5.21.2012
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
12 of 98
Held by Ventures Licenses Expiry
SEIVAL GERAÇÃO DE ENERGIA LTDA. UTE SEIVAL LI 589/2009* 2.17.2014SEIVAL SUL MINERAÇÃO LTDA. SEIVAL MINE LO No. 9221/2009* 10.20.2013CENTRAL EÓLICA MORADA NOVA LTDA. CGE MORADA NOVA LP 0010/2012 8.10.2014CENTRAL EÓLICA SÃO FRANCISCO LTDA. CGE SÃO FRANCISCO LP 0083/2012CENTRAL EÓLICA MILAGRES LTDA. CGE MILAGRES LP 0084/2012CENTRAL EÓLICA SANTA LUZIA LTDA. CGE SANTA LUZIA LP 0085/2012CENTRAL EÓLICA PEDRA VERMELHA I LTDA. CGE PEDRA VERMELHA I LP 0090/2012CENTRAL EÓLICA ASA BRANCA LTDA. CGE ASA BRANCA LP 0091/2012CENTRAL EÓLICA SANTO EXPEDITO LTDA. CGE SANTO EXPEDITO LP 0092/2012CENTRAL EÓLICA PEDRA VERMELHA II LTDA. CGE PEDRA VERMELHA II LP 0093/2012CENTRAL EÓLICA PAU D´ARCO LTDA CGE PAU D´ARCO LP 0184/2013 4.26.2015CENTRAL EÓLICA PEDRA ROSADA LTDA CGE PEDRA ROSADA LP 0187/2013 5.2.2015CENTRAL EÓLICA PAU BRANCO LTDA CGE PAU BRANCO LP 0189/2013 5.10.2015CENTRAL EÓLICA ALGAROBA LTDA CGE ALGAROBA LP 0186/2013 5.6.2015CENTRAL EÓLICA UBAEIRA I LTDA CGE UBAEIRA I LP 0188/2013 5.10.2015CENTRAL EÓLICA UBAEIRA II LTDA CGE UBAEIRA II LP 0185/2013 5.6.2015CENTRAL EÓLICA SANTA BENVINDA I LTDA CGE SANTA BENVINDA I LP 0183/2013 5.23.2015CENTRAL EÓLICA SANTA BENVINDA II LTDA CGE SANTA BENVINDA II LP 0191/2013 5.10.2015CENTRAL EÓLICA BOA VISTA I LTDA CGE BOA VISTA I LP 0268/2013 6.18.2015CENTRAL EÓLICA BOA VISTA II LTDA CGE BOA VISTA II LP 0270/2013 6.18.2015CENTRAL EÓLICA BONSUCESSO LTDA CGE BONSUCESSO LP 0271/2013 6.18.2015CENTRAL EÓLICA PEDRA BRANCA LTDA CGE PEDRA BRANCA LP 0269/2013 6.18.2015
(*) The renewal of environmental licenses was applied for at least 120 (one hundred and twenty)days before the validity expires, as fixed in the respective license, and is extended automaticallyuntil the respective environmental authority states its final position. (Supplementary Law140/2011 art. 14 (4).
3 Presentation of the financial statements
The financial statements have been prepared based on the historic cost basis, adjusted to realizationvalue when applicable, except for financial instruments held at fair value, including derivativeinstruments.
The preparation of financial statements requires the use of certain critical accounting estimates. Italso requires management to exercise its judgment in the process of applying the accounting policies.The areas involving a higher degree of judgment or complexity, or areas where assumptions andestimates are significant to the parent company and financial statements are disclosed in Note 5.
(a) Consolidated financial statements
The consolidated financial statements have been prepared and are being presented in accordancewith Brazilian accounting practices, including the pronouncements issued by the AccountingPronouncements Committee (CPCs) and International Financial Reporting Standards issued by theInternational Accounting Standards Board (IASB).
The presentation of the individual and consolidated Statement of Value Added (DVA) is required byBrazilian corporate legislation and the accounting practices adopted in Brazil that apply to listedcompanies. IFRS does not require the presentation of this statement. As a consequence, under IFRSthis statement is being presented as supplementary information, without prejudice to the set of thefinancial statements.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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(b) Individual financial statements
The individual financial statements have been prepared in accordance with the accounting practicesadopted in Brazil, issued by the Accounting Pronouncements Committee and are disclosed inconjunction with the consolidated financial statements.
In the individual financial statements the subsidiaries and joint operations are recorded by theequity accounting method and adjusted according to the proportion held by the Company'scontractual rights and obligations.
For the purpose of BR GAAP, Law 11941/09 abolished deferred assets, permitting the maintenanceof the balance accumulated up to December 31, 2008, which may be amortized in up to 10 years,subject to impairment tests. Following the adoption of IFRS, the Company recorded the amount ofR$ 26,192 in the consolidated accumulated losses, net of tax at January 1, 2009, corresponding to itsand its subsidiaries' deferred charges at that date. The difference between the individual andconsolidated shareholders' equity is therefore related to the deferred asset which was recognized inaccumulated losses in the consolidated shareholders' equity.
The table below shows the reconciliation between the individual and consolidated shareholders'equities at December 31, 2013:
2013
Shareholders' equity - Parent Company 2,468,743Deferred charges - Law 11941/09 (18,503 )
Shareholders' equity - Attributable to controlling shareholders 2,450,240
The Board of Directors authorized the issuance of these financial statements on March 27, 2013.
(c) Changes in accounting policies and disclosures
The following pronouncements were adopted for the first time in the financial year that started onJanuary 1, 2013 and had material impacts on the Company.
(i) CPC 19 (R2)/IFRS 11 - "Joint Arrangements" is driven by the rights and obligation of the partiesarising from the arrangement rather than the legal form of the arrangement. There are two types ofjoint arrangement: joint operations and joint ventures. Joint operations arise when investors haverights over the assets and liabilities related to the business. The joint operator should recognize itsassets, liabilities, revenue and expenses. Joint ventures arise when the rights are held over thebusiness's net assets and are recognized by equity accounting. Proportionate consolidation is nolonger permitted. The impacts of this adoption on the financial statements can be seen in Note 4.
(ii) CPC 36 (R3)/IFRS 10 - "Consolidated Financial Statements", Under IFRS 10, the structure of thejoint arrangement is the main factor in determining whether the entity will be included in theconsolidated financial statements of the parent company. The impacts of this change on the financialstatements can be seen in Note 4.
(iii) CPC 40 (R1)/IFRS 7 - "Financial Instruments: Disclosure" - this amendment includes new disclosurerequisites regarding the offsetting of assets and liabilities.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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(iv) CPC 45/IFRS 12 - "Disclosure of Interests in Other Entities" brings together the disclosurerequirements about an entity's interests in other entities, including joint arrangements, associatedcompanies, unconsolidated structured entities and other entities not reported in the balance sheet.
(v) CPC 46/IFRS 13 - "Fair value measurement" aims to improve consistency and reduce complexitywhen measuring fair value, providing a more precise definition and a single source for measuringfair value and disclosure requirements.
The main accounting policies used to prepare these financial statements are defined in Note 4. Thesepolicies were consistently applied in the previous years presented, unless stipulated otherwise.
4 Significant accounting policies
The main accounting policies used to prepare these financial statements are as follows.
4.1 Consolidation
The consolidated financial statements include the financial statements of the parent company andthe companies the Company has the (direct or indirect) control of and Exclusive Funds, as shownbelow:
Parent Company Interest
2013 2012
Direct subsidiaries (consolidated)Pecém II Geração de Energia S.A. 100.00% 99.70%Itaqui Geração de Energia S.A. 100.00% 100.00%Amapari Energia S.A. 51.00% 51.00%Seival Sul Mineração Ltda. 70.00% 70.00%Termopantanal Participações Ltda. 66.67% 66.67%Parnaíba Geração de Energia S.A. 70.00% 70.00%Parnaíba II Geração de Energia S.A. 100.00% 100.00%Parnaíba V Geração de Energia S.A. 99.99% 99.99%Parnaíba Geração e Comercialização de Energia S.A. 70.00%ENEVA Investimentos S.A. 99.99% 99.99%ENEVA Desenvolvimento S.A. 99.99% 99.99%Tauá II Geração de Energia Ltda. 100.00% 100.00%Exclusive funds:Fundo de Investimento em Cotas de Fundos de Investimento
Multimercado Crédito Privado MPX 63 100.00% 100.00%Fundo de Investimento Multimercado Crédito Privado MPX 100.00% 100.00%
The following accounting policies are applied in the preparation of the consolidated financialstatements.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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(a) Subsidiaries
Subsidiaries are entities the Company exercises control over. The Company controls an entity whenit is exposed or entitled to variable returns deriving from its involvement in the entity and caninterfere in its returns due to the power it exercises over the entity. Subsidiaries are fullyconsolidated from the date on which control is transferred to the Company. They are deconsolidatedfrom the date that control ceases.
The Company uses the acquisition method to record business combinations. The amount transferredto acquire a subsidiary is the fair value of the transferred assets, liabilities incurred and equityinstruments issued by the Company. The amount transferred includes the fair value of assets andliabilities resulting from a contingent payment contract when applicable. Acquisition costs areexpensed in the statement of operations for the year as and when incurred. The identifiable assetsacquired and the liabilities and the contingent liabilities undertaken in a business combination areinitially measured at fair value at the acquisition date. The Company recognizes the minority interestin the acquired party at both fair value and the proportional amount of the minority interest in thefair value of the acquired party's net assets. The minority interest is measured on the date of eachacquisition.
Any excess of (i) the amount transferred (ii) the minority interest in the acquiree, (iii) the fair valueat the acquisition date of any previous equity interest in the acquired party in relation to the fairvalue of the Group's interest in net identifiable assets acquired is recorded as goodwill. When thetotal amount transferred, the minority interest recognized and the measurement of the interestpreviously held is lower than the fair value of the net assets of the acquired subsidiary, the differenceis recognized directly in profit or loss for the year.
Transactions, balances and unrealized gains on intercompany transactions are eliminated.Unrealized losses are also eliminated, unless the transaction provides evidence of impairment of theasset transferred. Accounting policies of subsidiaries have been changed where necessary to ensureconsistency with the policies adopted by the Company.
(b) Transactions with minority interests
The Company accounts for transactions with minority interests as transactions with owners of theCompany's assets. For acquisitions of minority interests, the difference between any considerationpaid and the portion of the book value of the subsidiary's net assets acquired is recorded in theshareholders' equity. Gains or losses on sales to minority interests are also recorded in theshareholders' equity in the account "Equity Appraisal Adjustments".
(c) Loss of control over subsidiaries
When the Company ceases to exercise control, any interest held in the entity is remeasured at fairvalue, and the change in book value is recognized in the statement of operations. The fair value is thebook value for the subsequent recording of the interest held in an associated company, joint-ventureor a financial asset. Furthermore, any amounts previously recognized in other comprehensiveincome relating to that entity are recorded as though the Company had directly sold the relatedassets or liabilities. The amounts previously recognized in other comprehensive income are thereforereclassified in the income statement of operations.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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(d) Associated companies and joint arrangements
Associated companies are all the entities over which the Company exercises significant influence butdoes not control, in which it generally holds an equity interest of between 20% and 50% of the votingrights.
Joint arrangements are arrangements for which the Company has joint control. Joint arrangementsare classified as joint operations or joint ventures, depending on the contractual rights andobligations of each investor.
Joint operations are recorded in the financial statements to represent the Company's contractualrights and obligations. The assets, liabilities, revenue and expenses related to their interests in jointoperations are therefore recorded individually on the financial statements.
Investments in associated companies and joint ventures are recorded by the equity accountingmethod and recognized initially at cost. The Company's investment in associated companies andjoint ventures include the goodwill identified on the acquisition, net of any accumulated impairmentloss.
The Company's interest in the profits or losses of its associated companies and joint ventures isrecognized in the statement of operations and its interest in the changes in reserves is recognized inthe Company's reserves. When the Company's interest in the losses of an associated company orjoint venture is equal to or greater than the carrying amount of the interest in that company,including any other receivables, the Company does not recognize additional losses, unless it hasincurred obligations or makes payments on behalf of the associated company or joint venture.
Unrealized gains on transactions between the Company and its associated companies and jointventures are eliminated in proportion to the Company's interest. Unrealized losses are alsoeliminated, unless the transaction provides evidence of impairment of the asset transferred.Accounting policies of associated companies have been changed where necessary to ensureconsistency with the policies adopted by the Company.
If the equity interest in the associated company diminishes but significant influence is maintained,only a proportional part of the amount previously recognized in other comprehensive income will bereclassified in the statement of operations, where appropriate.
Gains and losses resulting from dilutions occurring in interests in associated companies arerecognized in the statement of operations.
4.2 Segment reporting
Operating segments are reported consistently with the internal reports provided to the mainoperating decision taker. The main taker of operating decisions, responsible for allocating funds andevaluating the performance of operating segments, is the Board of Directors, which is alsoresponsible for making the Company's strategic decisions.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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4.3 Foreign currency translation
(a) Functional currency and reporting currency
The items included in each of the company's entities' financial information are measured by usingthe currency of the main economy in which the company operates ("functional currency"). Theindividual and consolidated financial statements are presented in R$, which is the Company'sfunctional currency and the Company's reporting currency. The functional currency of its jointventure MPX Chile Holding Ltda. is the Chilean peso (MPX Chile Holding Ltda.), in function of itsbusiness plans, the economic environment and primarily due to its operating costs. Monetary assetsand liabilities denominated in foreign currencies were translated into reais at the foreign exchangerate ruling at the balance sheet date.
(b) Transactions and balances
Foreign-currency transactions are translated into the functional currency at the exchange ratesprevailing on the transaction or valuation dates, on which the items are remeasured. Exchange gainsand losses resulting from the settlement of these transactions and the translation at the exchangerates at the end of the financial year for monetary assets and liabilities denominated in foreigncurrency are recognized in the statement of operations, except when qualified as hedge accountingand are therefore deferred in equity as cash flow hedges and net investment hedges.
Exchange gains and losses related to loans and cash and cash equivalents are stated in the statementof operations as financial income or costs.
(c) Companies with different functional currency
The results and financial position of MPX Chile Holding Ltda (which does not have the currency of ahyper-inflationary economy) whose functional currency is different from the reporting currency aretranslated into the reporting currency as follows:
(i) The assets and liabilities of each statement of financial position presented are translated at theclosing rate on the reporting date.
(ii) The revenue and expenses of each statement of operations are translated at the average exchangerates (unless this average is not a reasonable approximation of the cumulative effect of the rates inforce on the operations' date, in which case the revenue and expenses are translated at the rate onthe date of the operations).
(iii) All resulting exchange differences are recognized as a separate component in the equity account"Equity appraisal adjustments".
On consolidation, exchange differences arising from the translation of the net investment in foreignoperations and of loans and other currency instruments designated as hedges of such investments,are recognized in equity. When a foreign operation is partially disposed of or sold, exchangedifferences that were recorded in equity are recognized in the statement of operations as part of thegain or loss on the sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assetsand liabilities of the foreign entity and translated at the closing rate.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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4.4 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less, with immaterial riskof change in value, where the balance is presented net of the balances of overdrafts in the statementof cash flows.
4.5 Financial assets
4.5.1 Classification
The Company classifies its financial assets at initial recognition in the following categories: at fairvalue through profit or loss and loans and receivables. The classification depends on the purpose forwhich the financial assets were acquired.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financialasset is classified in this category if acquired principally for the purpose of selling in the short-term.Assets in this category are classified as current assets. Derivatives are also classified as held fortrading, except for those designated as hedge instruments.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market. They are presented in current assets, except for maturitiesgreater than 12 months after the end of the reporting period (in which case they are classified undernoncurrent assets).
4.5.2 Recognition and measurement
The purchase and sale of financial assets are normally recognized at the trading date. Investmentsare initially recognized at fair value plus transaction costs for all financial assets not carried at fairvalue through profit or loss. Financial assets carried at fair value through profit or loss are initiallyrecognized at fair value, and transaction costs are expensed in the statement of operations. Financialassets are derecognized when the rights to receive cash flows have expired or have been transferredand the Company has substantially transferred all risks and rewards of ownership. Loans andreceivables are subsequently carried at amortized cost using the effective interest rate method.
Gains or losses deriving from changes to the fair value of financial assets measured at fair valuethrough profit and loss are stated in the statement of operations under "Financial income or costs" inthe period in which they occur.
Exchange variances on the monetary instruments are recognized in profit or loss. Exchangevariances on non-monetary instruments are recognized in equity.
4.5.3 Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount recorded in the balance sheet whenthere is a legal right to offset the recognized amounts and there is an intention to settle on a netbasis, or realize the asset and settle the liability simultaneously.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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4.5.4 Impairment of financial assets
(a) Assets carried at amortized cost
The Company assesses at each reporting date whether there is objective evidence that a financialasset or group of financial assets is impaired. A financial asset or group of financial assets andimpairment losses are incurred only if there is objective evidence of impairment as a result of one ormore events that occurred after the initial recognition of the asset ("loss event"), and that lossevent(s) had an impact on the estimated future cash flows of the financial asset on group of financialassets that can be reliably estimated.
The criteria that the Company uses to determine whether there is objective evidence of animpairment loss include:
(i) significant financial difficulty of the issuer or debtor;
(ii) a breach of contract, such as a default or delinquency in interest or principal payments;
(iii) the Company, for economic or legal reasons relating to the borrower's financial difficulty, granting tothe borrower a concession that the lender would not normally consider;
(iv) it becomes probable that the borrower will enter bankruptcy or other financial reorganization;
(v) the disappearance of an active market for that financial asset because of financial difficulties; or
(vi) observable data indicating that there is a measurable decrease in the estimated future cash flowsfrom a portfolio of financial assets since the initial recognition of those assets, although the decreasecannot yet be identified with the individual financial assets in the portfolio, including:
adverse changes in the payment status of borrowers in the portfolio; and national or local economic conditions that correlate with defaults on the assets in the portfolio.
The amount of the impairment loss is measured as the difference between the asset's carryingamount and the present value of estimated future cash flows (excluding future credit losses that havenot been incurred) discounted at the financial asset's original effective interest rate. The carryingamount of the asset is reduced and the amount of the loss is recognized in the statement ofoperations. If a loan or held-to-maturity investment has a variable interest rate, the discount rate formeasuring any impairment loss is the current effective interest rate determined under the contract.As a practical expedient, the Company may measure impairment on the basis of an instrument's fairvalue using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognized (such as animprovement in the debtor's credit rating), the reversal of the previously recognized impairment lossis recognized in the consolidated statement of operations.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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4.5.5 Derivative financial instruments and hedge operations
Derivatives are initially recognized at fair value on the date a derivative contract is entered into, andare subsequently remeasured at their fair value. The method of recognizing the resulting gain or lossdepends on whether the derivative is designated or not, as a hedging instrument, in the case ofadoption of hedge accounting. In this case, the method depends on the nature of the item beinghedged. The Company uses hedge accounting and designates certain derivatives as hedges of aspecific risk associated to an asset or liability recognized or a highly probable forecast operation(cash flow hedge).
On initial designation, the Company formally documents the relationship between the hedginginstrument and hedged items, including the risk management objectives and strategy in undertakingthe hedge transactions. The Company also makes an assessment, both at the inception of the hedgerelationship as well as on an ongoing basis, of whether the hedging instruments are expected to behighly effective in offsetting the changes in the fair value or cash flows of the respective hedgeditems.
The fair values of the derivative instruments used for hedging purposes can be seen in Note 18. Thetotal fair value of a hedging derivative is classified as a non-current asset and liability when theremaining term of the hedged item is greater than 12 months and as a current asset or liability, whenthe remaining term of the hedged item is less than 12 months. Trading derivatives are classified incurrent assets or liabilities.
(a) Cash flow hedges
The effective part of the changes in the fair value of the designated derivatives classified as cash flowhedges are recognized in shareholders' equity in the account "Equity Valuation Adjustment". Thegain or loss related to the non effective portion is immediately recognized in profit or loss as"Financial income or costs".
The amounts accumulated in equity are reclassified to profit or loss in the periods in which thehedged item affects profit or loss (for example, when the sale occurs of a hedged item). The gain orloss related to the effective portion of interest-rate swaps for hedging floating interest loans isrecognized in profit or loss as "Financial income or costs". The gain or loss related to the noneffective portion is recognized in profit or loss as "Financial income or costs".
When the hedged instrument matures or is sold or when the hedge no longer meets the hedgeaccounting criteria, any accumulated gain or loss in the equity at that time remains in equity and isrecognized in profit or loss when the operation is recognized in the statement of operations. When anoperation is no longer expected to occur, the accumulated gain or loss that had been recorded inequity is immediately transferred to profit or loss in "Other operating expenses".
(b) Derivatives measured at fair value through profit or loss
Certain derivative instruments do not qualify for hedge accounting. The changes in the fair value ofany of the derivative instruments are immediately recognized in the statement of operations under"Financial income or costs".
4.5.6 Trade receivables
Trade receivables are amounts due for the sale of electricity in the ordinary course of the Company'sbusiness. If collection is expected in one year or less, they are classified as current assets. If not, theyare presented as non-current assets.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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Trade receivables are recognized initially at fair value and subsequently measured at amortized costusing the effective interest rate method, less a provision for impairment of trade receivables.
4.5.7 Inventories
Inventories are measured at the lower of cost and net realizable value. The valuation method of theinventory is the weighted moving average method. Net realizable value is the estimated selling pricein the ordinary course of business, less the estimated costs of completion and estimated costsnecessary to make the sale.
4.5.8 Intangible assets
(a) Goodwill
The goodwill consists of the positive difference between the amount paid and/or payable for theacquisition of an entity and the net amount of the acquired subsidiary's assets and liabilities at fairvalue. Goodwill resulting from the acquisition of subsidiaries is recorded as intangible assets in theconsolidated financial statements. Any negative goodwill will be recorded as a gain in the net incomefor the period, on the acquisition date. The goodwill is tested for impairment annually. Goodwill isrecorded at cost value less amortization charges and accumulated impairment losses. The goodwill isamortized over the plant's authorization period. Impairment losses recognized in goodwill are notreversed. The gains and losses from selling an entity include the book value of the goodwill related tothe sold entity.
The goodwill is allocated to the cash generating units (UCGs) for the purpose of impairment testing.This allocation is made to the cash generating units or groups of cash generating units that willbenefit from the business combination generating the goodwill, and is identified by operationalsegment.
(b) Other intangible assets
Intangible assets consist of assets acquired from third parties, with finite useful lives and aremeasured at cost, less accumulated amortization and accumulated impairment, when applicable.The other intangible assets primarily consist of energy generation contracts acquired from thirdparties.
4.5.9 Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at the historic cost of acquisition orconstruction, minus accumulated depreciation and impairment.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost ofassets built by the Company itself includes:
the cost of materials and direct labor,
any other costs to bring the asset to its location and condition necessary so it can be operated asintended by Management,
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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the dismantling costs, and the restoration of the site where these assets are located, and
loan costs on qualifiable assets.
The cost of property, plant and equipment can include reclassifications from other comprehensiveincome of qualifiable cash flow hedges for the purchase of fixed assets in foreign currency. Thesoftware purchased as an integral part of a piece of equipment is capitalized as a part of thatequipment.
When parts of an item of property, plant and equipment have different useful lives, these items arerecorded as separate items (principal constituents) of property, plant and equipment.
The gains and losses deriving from the sale of property, plant and equipment (determined bycomparing the funds obtained through the sale against the book value of the property, plant andequipment), are recorded net amongst other revenue/expense figures in the statement of operations.
Subsequent costs
Subsequent expenses are capitalized to the extent it is probable that the future benefits associatedwith these expenses will be transferred to the Group. Ongoing repairs and maintenance are expensedas incurred.
Depreciation
Items of property, plant and equipment are depreciated by the straight-line method in the statementof operations for the year, based on the useful estimated economic life of each component. Leasedassets are depreciated over the shorter of the lease term and their useful lives unless it is reasonablycertain that the Company will obtain ownership by the end of the lease term. Land is notdepreciated.
Items of property, plant and equipment are depreciated from the date they are installed and areavailable for use, or in the case of internally constructed assets, on the date construction iscompleted and the asset is available for use.
4.5.10 Impairment of non-financial assets
Assets with an indefinite useful life, such as goodwill, are not subject to amortization and are testedannually for impairment. Assets that are subject to amortization are reviewed for impairmentwhenever events or changes in circumstances indicate that the carrying amount may not berecoverable. An impairment loss is recognized when the asset's carrying amount exceeds itsrecoverable amount. This value is the higher between the fair value of an asset, minus selling costs,and its value in use. For impairment testing purposes, assets are grouped at the lowest levels forwhich there are separately identifiable cash flows (Cash-generating Units - CGUs). Non-financialassets, excluding goodwill, that have been adjusted for impairment are subsequently reviewed inorder to analyze a possible reversal of the impairment at the reporting date.
The expected recoverability of the non-financial assets is based on the projection of future profittaking into consideration business and financial assumptions at the year end. Accordingly, theseestimates may differ from the effective profit in the future due to the inherent uncertainties involvingthese estimates.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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4.5.11 Trade accounts payable
Trade payables are obligations payable to suppliers for goods and services acquired in the normalcourse of business, and are classified as current liabilities if the payment is due within a year. If not,they are presented as non-current liabilities. Trade payables are recognized initially at fair value andsubsequently measured at amortized cost using the effective interest rate method.
4.5.12 Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings aresubsequently carried at amortized cost. Any difference between the proceeds (net of transactioncosts) and the settlement value is recognized in the statement of operations over the period of theborrowings using the effective interest rate method.
Borrowings are classified as current liabilities unless the Company has an unconditional right todefer settlement of the liability for at least 12 months after the reporting period.
General and specific borrowing costs that are directly attributed to the acquisition, construction orproduction of a qualifiable asset, i.e. an asset that requires a long time to be concluded for thepurpose of use or sale, are capitalized as part of the asset's cost when it is probable that they willresult in future economic benefits for the entity and that such costs can be reliably measured. Otherborrowing costs are recorded as an expense in the period in which they are incurred.
4.5.13 Provisions
Provisions are recognized when: (i) the Company has a present legal or constructive obligation as aresult of past events; (ii) it is not probable that an outflow of resources will be required to settle theobligation; and (iii) the amount can be reliably estimated. The provisions do not include futureoperating losses.
When there is a number of similar obligations, the probability of settling them is determined,taking into account the class of the obligations taken as a whole. A provision is recognized even if theprobability of settlement related to any other individual items included in the same class ofobligations is minimal.
Provisions are measured at the present value of the expenditures expected to be required to settle theobligation, at a before tax rate, which reflects the current market valuations of the money's value andspecific risks inherent to the obligation. Any increase in the obligation over the course of time isrecognized as a financial cost.
4.5.14 Current and deferred income and social contribution taxes
The income tax and social contribution expenses for the period comprise current and deferred taxes.Income taxes are recognized in the statement of operations, except to the extent that they relate toitems recognized in comprehensive loss or directly in equity. In this case, the taxes are alsorecognized in comprehensive loss or directly in equity.
The current income tax and social contributions are calculated using tax rates enacted orsubstantively enacted at the reporting date in the countries in which the Company's entities operateand generate taxable income. Management periodically evaluates the positions taken by theCompany in income tax returns with respect to situations in which the applicable tax regulation issubject to interpretation. It establishes provisions where appropriate on the basis of amountsexpected to be paid to the tax authorities.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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Current income and social contribution taxes are stated net, by entity, in liabilities when there areamounts payable, or in assets when the prepaid amounts exceed the total amount due at thereporting date.
Deferred income tax and social contribution are recognized, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and their carrying amounts in thefinancial statements. However, the deferred income and social contribution taxes are not recognizedif they arise from the initial recognition of an asset or liability in a transaction that is not a businesscombination and that, at the time of the transaction, affects neither accounting profit nor taxableprofit (tax loss).
Deferred income tax and social contribution assets are recognized only to the extent that it isprobable that future taxable profit will be available against which the temporary differences can beutilized.
Deferred income tax is recognized on temporary differences deriving from investments insubsidiaries, except where the timing of the reversal of the temporary differences is controlled by theCompany and provided it is probable that the temporary difference will not be reversed in theforeseeable future.
Deferred income tax assets and liabilities are presented net in the balance sheet when there is a legalright and intention to offset them against current taxes, generally related to the same legal entity andtax authority. Deferred tax assets and liabilities in different entities or in different countries aregenerally presented separately, and not net.
4.5.15 Employee benefits
(a) Share-based payments
The Company has a series of remuneration plans, consisting of shares, by which the entity receivesservices from employees in exchange for shares of the Company. The fair value of the employee'sservices received in exchange for options is recognized as an expense. The total amount to berecognized is determined by reference to the fair value of the awarded options, not including theimpact of any rights acquisition conditions based on service and performance other than marketconditions (for example, profitability, sales targets and length of service for a specific time period).The acquisition right conditions other than market conditions are included in the assumptions aboutthe number of options whose rights should be acquired. The total value of the expenses is recognizedduring the vesting period; during which the specific acquisition conditions have to be met. At thereporting date the entity revises its estimate of the number of options whose rights should beacquired based on the acquisition right conditions other than market conditions. It recognizes theimpact on the review of the initial estimates, if applicable, in profit or loss, with a correspondingadjustment in equity.
The amounts received net of any directly attributable transaction costs are credited to share capital(nominal value) when the options are exercised.
(b) Profit sharing
The Company recognizes a profit-sharing liability and expense using a method that takes intoaccount the profit attributable to the Company's employees after certain adjustments. A provision isrecognized when the Company has a contractual obligation or a past event that has created aconstructive obligation.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
25 of 98
4.5.16 Share capital
Common shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are recognized as adeduction from equity, net of any tax effects.
4.5.17 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of electricityin the ordinary course of the Company's activities. Revenue is stated net of tax, returns, rebates anddiscounts and after eliminating intercompany sales.
The Company recognizes revenue when the amount can be reliably estimated, it is probable thatfuture economic benefits will flow to the entity and when specific criteria have been met for each ofthe Company's activities, as described below. The Company bases its estimates on historical results,taking into consideration the type of customer, the type of transaction and the specifics of each sale.
(a) Electricity sales
Revenue on any sales is recognized by a measurement equal to the volume of energy transferred tothe client and estimates to measure the energy delivered, but does not yet take into account themeasurements prior to closing the financial year. Revenue derives from electricity supplyagreements, including a fixed monthly amount and variable amount according to the demandrequired by the National Electric System Operator - ONS.
(b) Financial revenue
Financial revenue is recognized according to the term incurred on the accrual basis, using theeffective interest rate method. When an impairment loss in respect of an accounts receivable isidentified, the Company reduces its carrying amount to its recoverable value, which is the estimatedfuture cash flow discounted at the instrument's original effective interest rate. Subsequently, as timegoes by, interest is incorporated into receivables against interest income. This interest income iscalculated at the same effective interest rate used to determine the recoverable amount, i.e., theoriginal rate of the instrument.
4.5.18 Leasing
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessorare classified as operating leases. Payments made for operating leases (net of any incentives receivedfrom the leaser) are recognized in the income statement of operations on the straight-line methodduring over the period of the lease.
4.5.19 Distribution of dividends and interest on shareholders' equity
Dividends and interest on shareholders' equity paid to the Company's shareholders are recognized asa liability in the Company's financial statements at the end of the year, pursuant to the Company'sbylaws. Any amount in excess of the mandatory minimum dividend is only provided for on the datethey are approved by the shareholders at the Board of Directors meeting.
The tax incentive for interest on shareholders' equity is recognized in profit or loss.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
26 of 98
4.5.20 Fuel Usage Quota Subsidy - CCC
This subsidy aims to cover part of the elevated cost of generating electricity in isolated systems,whose funds derive from the Fuel Consumption Account (CCC).
This denotes revenue from the subsidy received for fuel ordered or paid for via the CCC.
4.5.21 Change in accounting policies and re-presentation of comparative figures
The changes in the accounting policies impacted the consolidated financial statements, requiring there-presentation of comparative figures, as required by the IAS 8. The main adjustments made andthe impacts on the financial statements of the reported periods are as follows:
(a) Proportional deconsolidation
The Company holds joint control in a 50% investment in the companies shown in our organizationalchart in Note 1. Because the parties to the agreement are entitled to the company's net assets, thisagreement has been classified as a joint-venture and accordingly accounted for by the equityaccounting method. The investment used to be consolidated proportionately.
The statement below shows the changes made to the comparative balances represented in thesefinancial statements:
Consolidated
2012
Originallyreported Adjustments Re-presented
Assets
CurrentCash and cash equivalents 590,469 (71,192 ) 519,277Securities 3,441 3,441Accounts receivable 152,114 (130,769 ) 21,345Subsidies receivable - Fuel Consumption Account 17,561 17,561Inventories 211,718 (69,031 ) 142,687Prepaid expenses 40,462 (21,111 ) 19,351Recoverable taxes 57,438 (20,028 ) 37,410Gain on derivatives 3,018 3,018Other advances 20,267 (18,484 ) 1,783Secured deposits 4,237 (4,202 ) 35Other accounts receivable 3 (3 )
1,100,728 (334,820 ) 765,908
Non-currentLong-term
Prepaid expenses 8,705 (211 ) 8,494Secured deposits 137,717 (2,069 ) 135,648Subsidies receivable - Fuel Consumption Account 24,617 24,617Recoverable tax 34,709 (10,675 ) 24,034Deferred income and social contribution taxes 456,123 (150,575 ) 305,548Loan with subsidiaries 359 134,567 ) 134,926Accounts receivable from other related parties 8,575 (7,441 ) 1,134Accounts receivable from associated companies 3,732 3,061 ) 6,793Advance for future capital increase - with associated
companies 12,425 12,425Embedded derivatives 479 479
675,016 (20,918 ) 654,098
Investments 62,956 770,999 833,955
Property, plant and equipment 7,362,815 (1,792,416 ) 5,570,399
Intangible assets 249,665 (34,429 ) 215,236
9,451,180 (1,411,584) 8,039,596
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
27 of 98
Consolidated
2012
Originallyreported Adjustments Re-presented
Liabilities
CurrentTrade payables 228,638 (113,377) 115,261Borrowings and financing 1,915,402 (95,428 ) 1,819,974Debts with associated companies 26,783 26,783Debts with controlling company 3,407 (3,407)Debts with other related parties 19,057 (15,068) 3,989Debentures 111 111Taxes and contributions payable 11,375 (4,134) 7,241Social and labor obligations 12,980 (3,117) 9,863Losses on derivative transactions 39,506 (16,555) 22,951Contractual retention 133,935 (56,561 ) 77,374Profit sharing 23,900 (3,267) 20,633Dividends payable 1,960 1,960Other liabilities 16,888 (13,563) 3,325
2,407,159 (297,694) 2,109,465
Non-currentLoans and financing 4,151,947 (1,047,141) 3,104,806Debts to other related parties 215 215 430Debentures 4,954 4,954Embedded derivativesLosses on derivative transactions 166,992 (72,195) 94,797Provision for unsecured liabilities 19,840 19,840Deferred income and social contribution taxes 10,431 (8,383) 2,048Provision for dismantlement 4,197 (2,079) 2,118Other provisions 710 (710)
4,339,446 (1,110,453) 3,228,993
Shareholders' equityCapital 3,731,734 3,731,734Capital reserve 321,904 321,904Equity appraisal adjustments (119,067 ) (119,067 )Accumulated deficti (1,384,971 ) (1,384,971 )
Shareholders' equity attributable to controlling shareholders 2,549,600 2,549,600
Minority interests 154,975 (3,437) 151,538
Total shareholders' equity 2,704,575 (3,437) 2,701,138
9,451,180 (1,411,584) 8,039,596
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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Statement of operations for the year
Consolidated
2012
Originallyreported Adjustments Re-presented
Revenue from goods sold and services provided 490,940 (442,154 ) 48,786Cost of goods and/or services sold (597,554 ) 546,605 (50,949 )
Gross profit (106,614 ) 104,451 (2,163 )
Operating income/expenses (314,937 ) (89,771 ) (404,708 )General and administrative (280,284 ) 49,258 (231,026 )Personnel and management (134,188 ) 22,748 (111,440 )Other expenses (20,860 ) 8,449 (12,411 )Outsourced services (107,473 ) 15,334 (92,139 )Depreciation and amortization (3,976 ) 1,188 (2,788 )Leasing and rentals (13,787 ) 1,539 (12,248 )
Other operating revenue 1,823 (615 ) 1,208Other operating expenses (2,241 ) (14,546 ) (16,787 )
Unsecured liability (14,671 ) (14,671 )Losses on the sale of assets (895 ) 16 (879 )Provision for investment losses (1,346 ) 109 (1,237 )Equity in income of subsidiaries (34,235 ) (123,868 ) (158,103 )
Result before financial income/costs and taxes on income (421,551 ) 14,680 (406,871 )
Financial result (127,540 ) 37,087 (90,453 )Financial income 165,279 (415,102 ) (249,823 )Exchange variance - gain 74,258 (49,172 ) 25,086Fair value of debentures 62,482 62,482Interest income bank deposits 85,136 (8,537 ) 76,599Derivative financial instruments (66,739 (355,945 ) (422,684 )Other financial income 10,142 (1,448 ) 8,694Financial costs (292,819 ) 452,189 159,370Exchange variance loss (89,793 73,314 (16,479 )Derivative financial instruments 29,018 369,620 398,638Debenture interest/cost (130,863 ) (130,863 )Fair value of debenturesOther financial expenses (101,181 ) 9,255 (91,926 )
Results before taxes on net income (549,091 ) 51,767 (497,324 )
Income and social contribution taxes on profit 114,638 (51,762 62,876
Current (2,289 ) 368 (1,921 )Deferred charges 116,927 (52,130 ) 64,797
Net result for the year (434,453 ) 5 (434,448 )
Loss for the year (434,453 ) 5 (434,448 )
Attributed to partners of the parent company (435,201 ) (435,201 )Attributed to minority partners 749 5 754
Loss per share
Basic and diluted loss per share (R$) (0.7513 ) (0.8705 ) (1.6218 )
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
29 of 98
Statement of cash flows - indirect method
Consolidated
2012
Originallyreported Adjustments Re-presented
Cash flows from operating activitiesLoss before IR and CSLL (549,092 ) 51,769 (497,323 )Adjustments to reconcile loss to cash flow from operating activities
Depreciation and amortization 3,976 4,835 8,811Equity in income of subsidiaries 34,235 123,868 158,103Operations with derivative financial instruments 37,721 (13,675 ) 24,046Stock options awarded 47,279 47,279Amortization of deferred chargesInvestment devaluation 1,346 (108 ) 1,237Provision for unsecured liabilities 14,671 14,671Provision for dismantlement (683 ) 683Minority interestsDeferred income and social contribution liabilities, netCurrent income and social contribution taxesDebenture interest/cost 130,864 (1 ) 130,863Fair value of debentures (62,482 ) (62,482 )Interest on loans and related parties 67,054 (67,054 )Equity appraisal (47,397 ) (47,396 )
(337,179 ) 114,988 (222,191 )
Changes in assets and liabilitiesOther advances (8,982 ) 15,615 6,633Prepaid expenses (32,745 ) 20,136 (12,609 )Accounts receivable (130,216 ) 130,351 135
Recoverable taxes 36,399 19,972 56,371Inventory (125,780 ) 41,283 (84,497 )Deferred taxesTaxes, charges and contributions (6,886 ) (3,811 ) (10,697 )Trade payables 41,958 (81,175 ) (39,216 )Provisions and payroll charges (5,037 ) (1,229 ) (6,266 )Accounts payable (38,824 ) (6,572 ) (45,396 )CCC subsidies receivable (12,732 ) (12,733 )Debts/credits with related parties 14,771 (13,541 ) 1,231
(268,073 ) 121,029 (147,044
OthersOther changes on investments (213,530 ) 213,530Other assets and liabilities 5,433 14,876 20,308Cash from effect of spin-off 227,175 (227,175 )
19,077 1,232 20,308
Net cash provided by operating activities (586,175 ) 237,248 (348,927 )
Cash flows from investment activitiesAcquisition of PPE and intangible assets (2,066,423 ) 501,911 (1,564,513 )Securities 5,996 5,996Capital increase in investments (11,500 ) (542,732 ) (554,232 )Cash resulting from sale of property, plant and equipment
and intangible assets 112,075 (112,936 ) (861 )Debt with related parties (359 ) (133,886 ) (134,245 )AFAC for associated companies and joint ventures (12,425 ) (12,425 )Dividends (310 ) 1 (309 )Contractual retentions (46,562 ) (4,028 ) (50,590 )Secured deposits (17,640 ) (2,051 ) (19,691 )
Net cash provided by investing activities (2,024,724 ) (306,148 ) (2,330,872
Cash flows from financing activitiesFinancial instruments (58,383 ) 66,331 7,947Capital Increase 2,431,907 (742,187 ) 1,689,720Borrowings obtained 1,686,283 (5,612 ) 1,680,671Capital increase (decrease) deriving from minority interests 748 (748 )Issuance (payment) of debentures (1,559,414 ) 1 (1,559,413 )Adjustment Spin-off CCX Carvão - Colombia (742,187 ) 742,187
Net cash provided by financing activities 1,758,953 59,971 1,818,925
Increase (decrease) in cash and cash equivalentsOpening balance of cash and cash equivalents 1,442,415 (62,264 ) 1,380,151Closing balance of cash and cash equivalents 590,469 (71,191 ) 519,277
(851,946 ) (851,946 )
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
30 of 98
Statement of value added
Consolidated
2012
Originallyreported Adjustments Re-presented
RevenueSales of goods, products and services 490,940 (442,154 ) 48,786Revenue relating to construction of company assets 975,318 580,383 1,555,702
1,466,258 138,229 1,604,487
Consumables acquired from third parties(including ICMS and IPI) (702,521 ) 559,953 (142,567 )
Material, electricity, outsourced services and others (702,521 ) 559,953 (142,567 )
Gross value added 763,738 698,182 1,461,920
Depreciation, amortization and depletion (12,921 ) 4,110 (8,811 )
Net value added produced 750,817 702,292 1,453,109
Transferred value addedEquity in income of subsidiaries (34,235 ) (123,868 ) (158,103 )Financial income 157,760 (432,668 ) (274,909 )Others (66,739 ) 49,969 (16,770 )Derivative financial instruments (66,739 ) 66,739Provision for investment devaluation (1,237 ) (1,237 )Provision for unsecured liabilities (14,671 ) (14,671 )Losses on the sale of assets (861 (861 )
56,786 (506,568 (449,782 )
Total value added to be distributed 807,601 195,726 1,003,327
Distribution of value added 807,601 195,727 1,003,327
PersonnelDirect remuneration 101,865 (37,069 ) 64,796Benefits 15,867 17,412 33,279FGTS and contributions 21,765 (4,406 ) 17,359Others
139,497 (24,063 ) 115,434
Taxes, charges and contributionsFederal (111,823 ) 49,864 (61,959 )State
(111,823 ) 49,864 (61,959 )
Capital remuneration of third partiesInterest 182,382 (51,519 ) 130,863Rent 16,392 (3,346 ) 13,046Others 1,015,607 224,783 1,240,390
1,214,381 169,919 1,384,299
Losses on derivative transactions (29,018 ) (369,620 ) (398,638 )Advances to suppliers 975,737 579,965 1,555,702Insurance 3,691 (2,492 ) 1,199Exchange variance 15,535 (24,142 ) (8,607 )Financial costs 49,663 42,264 91,926Others (1,191 ) (1,191 )
Capital remunerationLoss for the year (435,202 ) 1 (435,201 )Minority interests in retained earnings 748 6 754
(434,454 ) 7 (434,447 )
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
31 of 98
Consolidated
January 1, 2012
Originallyreported Adjustments Re-presented
AssetsCurrent
Cash and cash equivalents 1,442,415 (62,264 ) 1,380,151Securities 9,437 9,437Accounts receivable 21,898 (418 ) 21,480Subsidies receivable - Fuel Consumption Account 4,828 4,828Inventories 85,938 (27,748 ) 58,190Prepaid expenses 13,908 (636 ) 13,272Recoverable taxes 37,711 (2,585 ) 35,126Gain on derivatives 19,289 17,156 36,445Other advances 11,285 (2,869 ) 8,416Secured deposits 61,844 61,844Other accounts receivable 39 (1 ) 38
1,708,592 (79,365 ) 1,629,227
Non-currentLong-term
Prepaid expenses 2,514 (550 ) 1,964Secured deposits 62,471 (8,323 ) 54,148Subsidies receivable - Fuel Consumption Account 24,617 24,617Recoverable tax 90,834 (8,145 ) 82,689Deferred income and social contribution taxes 339,049 (90,187 ) 248,862Loans with subsidiaries 680 680Accounts receivable from other related parties 8,436 8,436Embedded derivatives 411,119 411,119
527,921 304,594 832,515
Investments 55,742 375,953 431,695
Property, plant and equipment 5,393,809 (1,430,830 ) 3,962,979
Intangible assets 267,616 (662 ) 266,954
7,953,680 (830,310 ) 7,123,370
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
32 of 98
Consolidated
January 1, 2012
Originallyreported Adjustments Re-presented
LiabilitiesCurrent
Trade payables 186,680 (32,204 ) 154,476Borrowings and financing 1,030,687 (36,079 ) 994,608Debts with other related parties 3,697 3,697Debentures 30,463 30,463Taxes and contributions payable 18,261 (322 ) 17,939Social and labor obligations 18,017 (1,889 ) 16,128Losses on derivative transactions 86,633 (59,053 ) 27,580Contractual retention 180,497 (52,532 ) 127,965Profit sharing 19,177 19,177Dividends payable 2,270 (1 ) 2,269Other liabilities 55,748 (7,028 ) 48,720
1,632,130 (189,108 ) 1,443,022
Non-currentLoans and financing 3,311,063 (984,962) 2,326,101Debts to other related parties 340 (340)Debentures 1,403,152 62,003 1,465,155Embedded derivatives 62,003 (62,003 )Losses on derivative transactions 156,798 345,925 502,723Deferred income and social contribution taxes 13,239 13,239Provision for dismantlement 4,880 (2,934 ) 1,946Other provisions 1,026 1,026
4,951,475 (641,285) 4,310,190
Shareholders' equityCapital 2,042,014 2,042,014Capital reserve 274,625 274,625Equity appraisal adjustments (71,670 ) (71,670Accumulated deficit (982,323 ) 11,426 (970,897 )
Shareholders' equity attributable tocontrolling shareholders 1,262,646 11,426 1,274,072
Minority interests 107,429 (11,343 ) 96,086
Total shareholders' equity 1,370,075 83 1,370,158
7,953,680 (830,310 ) 7,123,370
(b) Re-presentation of cash flows
The Company is re-presenting the cash flow for 2012 to present the opening of borrowings andfinancing and reflect comparability with the statement of cash flows for 2013, as well as transactionsreclassified from operating activities to financing activities.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
33 of 98
2012
Parent compny Consolidated
Originallyreported Adjustments Re-presented
Originallyreported Adjustments Re-presented
Cash flows from operating activitiesInterest on loans and related parties 47,182 (952 ) 46,230 67,054 (19,806 ) 47,248
Changes in assets and liabilitiesPayment of financial charges (12,556 ) (12,556 ) (150,795 ) (150,795 )Others assets and liabilities (9,498 ) 2 (9,496 ) 5,433 (35,717 ) (30,284 )
Cash flows from investment activitiesAcquisition of PPE and intangible assets (417 ) (0 ) (417 ) (2,066,424 ) 906,576 (1,159,848 )Changes in investments (1,076,940 ) (136,628 ) (1,213,568 ) (11,500 ) (525,956 ) (537,456 )
Cash flows from financing activitiesFunding of borrowings and financing 886,567 886,567 2,064,982 2,064,982Payment of borrowings (762,889 ) (762,889 )Contractual retentions (46,562 ) 46,562
4.5.22 New standards, amendments and interpretationsof standards that are not yet effective
The following new standards and interpretations have been issued by the IASB but are not in forcefor 2013. Whilst encouraged by the IASB, the early adoption of standards in Brazil is not permittedby the Accounting Pronouncements Committee (CPC).
IFRIC 21 - "Levies". The interpretation clarifies when an entity should recognize a liability to paya levy in accordance with the legislation. The obligation should only be recognized when theevent that generates the obligation arises. The interpretation is effective as from January 1, 2014.
IFRS 9 - "Financial Instruments" - addresses the classification, measurement and recognition offinancial assets and liabilities. IFRS 9 was issued in November 2009 and October 2010, itreplaces parts of IAS 39 relating to the classification and measurement of financial instruments.IFRS 9 requires financial assets to be classified into two categories: measured at fair value andmeasured at amortized cost. This determination is made upon initial recognition. The basis ofclassification depends on the entity's business model and the contractual cash flows fromfinancial instruments. In respect of financial liabilities, the standard maintains most of therequirements established by IAS 39. The main change applies to cases where the fair valueoption is adopted for financial liabilities, the portion of change of the fair value due to the entity'scredit risk is recorded in other comprehensive income instead of the profit or loss, except whenthis results in an accounting mismatch The Group is evaluating the overall impact of IFRS 9. Thestandard is applicable as from January 1, 2015.
There were no other IFRS standards or IFRIC interpretations that have not yet come into forcewhich could have a material impact on the Company.
5 Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based on historical experience and otherfactors, including expectations of future events that are believed to be reasonable under thecircumstances.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
34 of 98
5.1 Critical accounting estimates and assumptions
Based on assumptions, the Company makes estimates concerning the future. The resultingaccounting estimates will, by definition, seldom equal the related actual results. The estimates andassumptions that have a significant risk of causing a material adjustment to the carrying amounts ofassets and liabilities within the next year are addressed below.
(a) Impairment of non-current assets
The Company conducts impairment tests on property, plant and equipment, intangible assets anddeferred income and social contribution taxes, in accordance with the accounting policies describedin Note 4.5.10. The recoverable values of Cash Generating Units (UGCs) were determined based oncalculations of the value in use using assumptions and estimates primarily relying on studies of theregulated electricity trading market. These functions and estimates were discussed with theoperational managers and were revised and approved by Management.
(b) Fair value of derivatives and of options(share-based remuneration)
The fair value of financial instruments that are not traded in active markets is determined by usingvaluation techniques. The Company uses its judgment to choose several methods and to determinethe assumptions that primarily are based on the market conditions in force at the reporting date. TheGroup used a specific method to calculate the fair value of derivatives and options awarded,instruments which are not traded in active markets.
6 Cash and cash equivalents
Parent company Consolidated
2013 2012 2013 2012(Re-
presented)
Cash and bank deposits 396 260 16,493 5,922Fundo de Investimento MM MPX 63 (a) 109,647 206,003 202,444 513,355CDB/Purchase and sale agreements (b) 113 58,645
110,156 206,263 277,582 519,277
(a) Substantially consist of quotas in investment funds, of high liquidity, readily convertible into aknown amount of cash, regardless of asset maturity, and are subject to an insignificant risk of achange in value. This is a share investment fund FI Multimercado Crédito Privado MPX 63administrated by Banco Itaú and primarily backed by Bank Deposit Certificates - CDBs andsecurities subject to repurchase agreements issued by first-rate financial institutions andcompanies, all linked to floating rates and with an average yield of 100.9% (marked to market)and 101.2% (nominal rate on the curve) of the DI CETIP rate (Interbank Deposit Certificate -CDI). Securities held under repurchase agreements underlied by debentures represent purchaseand sale commitments, registered at CETIP or SELIC, when applicable, and with guarantee ofrepurchase at a previously established rate from the financial institutions. The portfolio consistsof 40.27% securities held under repurchase agreements and 59.73% at December 31, 2013.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
35 of 98
The consolidated financial statements include the balances and transactions of the exclusiveinvestment funds, whose only shareholders are the Company and its subsidiaries, as shownbelow:
Parent company Consolidated
2013 2012 2013 2012(Re-
presented)
Fundo Multimercado consolidadoEneva S.A. 109,647 206,003 109,647 206,003Amapari Energia S.A. 9,349 10,482Seival Sul Mineração Ltda. 406 516Parnaíba Geração de Energia S.A. 27,905 83,017Parnaíba II Geração de Energia S.A. 55,137 213,337
109,647 206,003 202,444 513,355
(b) Amounts invested in CDBs issued by first-rate financial institutions. The companies that holdthese amounts are the subsidiaries MPX Pecém II Geração de Energia S.A. and UTE Porto doItaqui Geração de Energia S.A.
The exclusive funds are regularly reviewed/audited by independent auditors and are subject toconstraints on the payment of services rendered by the asset manager, attributed to operatinginvestments, such as custody and audit fees and other expenses. There are no material financialobligations or company assets to guarantee these obligations.
7 Securities
Parent company Consolidated
2013 2012 2013 2012(Re-
presented)
LFT - Financial Treasury Bills 3,441
The securities include operations related to the acquisition of federal government bonds (LFTs)maturing after 90 days and recorded in current assets due to the fact they are expected to be realizedin the short-term.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
36 of 98
8 Secured deposits
Parent company Consolidated
2013 2012 2013 2012(Re-
presented)
BNDES - Porto do Pecém (a) 38 35 38 35BNDES - Itaqui (b) 64,811 10,671BNDES - Pecém II (c) 19,682 22,145Eneva S.A. (d) 102,649 102,649BNDES - Parnaíba (e) 34,044Others 69 183
38 102,684 118,644 135,683
Current 38 35 38 35Non-current 102,649 118,606 135,648
(a) Deposit linked to the obligations undertaken in the financing agreement between BNDES andthe joint subsidiary Porto de Pecém Geração de Energia S.A. referring to the portion of theintervening party Eneva S.A to maintain the own capital/debt ratio preestablished in theagreement. Relates to the part of Eneva S.A. in Fundo Bradesco Corporate FIC FI ReferenciadoDI Federal.
(b) Refers to the debt service reserve accounts linked to the financing agreement between thesubsidiary UTE Porto do Itaqui Geração de Energia S.A , BNB-Banco do Nordeste do Brasil S.A.and BNDES. The increase in 2013 refers to new deposits made in replacement of bankguarantees.
(c) Refers to the debt service reserve accounts linked to the financing agreement between BNDESand the subsidiary UTE Parnaíba Geração de Energia S.A.
(d) Financial Bills issued by Banco Citibank S.A., yielding the CDI rate, ceded as collateral for theloans taken out by Eneva S.A. from the financial institution. This loan was settled in 2013.
(e) Refers to the debt service reserve accounts linked to the financing agreement between BNDESand the subsidiary UTE Parnaíba Geração de Energia S.A.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
37 of 98
9 Accounts receivable and fuel consumption account
Consolidated
2013 2012(Re-
presented)
Amapari Energia S.A. (a) 40,273 51,287Itaqui Geração de Energia S.A. (b) 85,026 12,236Parnaíba Geração de Energia S.A. (b) 110,113Pecém II Geração de Energia S.A. (b) 89,786
325,198 63,523
Current 325,198 38,906Non-current 24,617
(a) The accounts receivable is for energy sold to Zamim Ferrous of R$ 9,472 (R$ 9,109 atDecember 31, 2012) and the receivable of the subsidiary is R$ 30,802 (R$ 17,561 at December31, 2012), as described below.
At December 31, 2013 the balance receivable of the subsidiary is R$ 30,802 (R$ 17,561 atDecember 31, 2012). This amount reflects the 4-month subsidy due to the delay to passthrough the subsidy to the Company. At December 31, 2012 subsidies for 3 months had beenrecorded.
The Company's non-current assets include the CCC reimbursement not received for the periodNovember 2008 to May 2009 of R$ 24,617 thousand. If this amount is not received, theCompany is entitled to charge Anglo Ferrous Amapá Ltda. for it. This is because, under theenergy supply agreement between the parties, in the event of an economic/financial imbalancefor reasons not attributable to the Company, the parties will adjust the contractual terms torestore the economic and financial equilibrium. However, to date collection proceduresagainst Anglo Ferrous Amapá Ltda. have not commenced, as the Company initially decided toadopt judicial measures against ANEEL in an attempt to obtain this reimbursement via theCCC mechanism.
Because of this new fact in the final quarter of 2013, i.e. the acquisition of Anglo FerrousAmapá by Swiss mining company Zamin Ferrous, Company Management wrote to Zaminrequesting a position about the recognition of this debt, in the event ANEEL turns down itslegal claim. In its reply, Zamin Ferrous stated that it is carrying out research in order to stateits position about the matter. In light of this and given the lengthy proceedings, CompanyManagement decided to make a provision for the entire amount in non-current assets.
(b) The balance denotes the accounts receivable of the subsidiaries Itaqui Geração de Energia S.A.under the electricity purchase contract in a regulated environment (CCEAR), signed withANEEL, of R$ 85,026 (R$ 12,235 at December 31, 2012) and the companies that came intooperation in 2013 Parnaíba Geração de Energia S.A. of R$ 110,113 and Pecém II Geração deEnergia S.A. of R$ 89,786, also under the CCEAR with ANEEL..
Accounts receivable accounts overdue represent 2.37% and were not provided for, as the Companyrates and risk of loss as remote.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
38 of 98
10 Inventories
Consolidated
2013 2012(Re-
presented)
Diesel oil/lubrificant (a) 12,685 13,967Coal (b) 49,070 128,720Electronic and mechanical parts (c) 16,621
78,376 142,687
(a) The balance consists of the reservoirs of diesel oil and lubricating oil used as consumables inelectricity generation by the subsidiaries Amapari Energia S.A.(R$ 9,943), Pecém II Geração deEnergia S.A. (R$ 1,279) and Itaqui Geração de Energia S.A. (R$ 1,463). The subsidiary AmapariEnergia S.A. has a contractual acquisition obligation ("take or pay") with BR Distribuidora S.A., torequire a minimum 3,600 m³ of diesel oil a month, for a fixed price or to pay for this even if it is nottaken. If the obligation is exercised, this results in the acquisition of the diesel oil used as aconsumable by the Company. The Company recorded a provision under trade payables for thedifference between the amount required and the minimum mandatory amount under the contract,charged to inventory. The balance of this provision at December 31, 2013 is R$ 8,481 (R$ 7,251 atDecember 31, 2012). This provision is restated semi-annually as specified in the diesel oil supplycontract.
(b) The balance consists of the inventory of coal used as a consumable in electricity generation bythe subsidiaries Itaqui Geração de Energia S.A. (R$ 22,682) and Pecém II Geração de EnergiaS.A. (R$ 26,389). The coal was acquired for the commissioning phase of the operation, and toestablish a security inventory at the plant, with a view to the commercial operations. Note thatPorto do Itaqui initiated its commercial operations, consuming coal inventories.
(c) The balance consists of electronic and mechanical parts for use and replacement in themaintenance operations carried out by the subsidiaries: Amapari Energia S.A. (R$ 1,363),Itaqui Geração de Energia S.A. (R$ 7,323), Pecém II Geração de Energia S.A. (R$ 3,601),Parnaíba Geração de Energia S.A. (R$ 4,236) and Parnaíba II Geração de Energia S.A. (R$ 98).
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
39 of 98
11 Recoverable and deferred taxes
The balance of recoverable taxes is as follows:
Parent company Consolidated
2013 2012 2013 2012(Re-
presented)
Income tax withheld at source (b) 3,533 11,391 12,161 23,539Prepaid income tax 3,687 1Prepaid social contributions 2,857 1Prepaid social contributions -
prior year (a) 462 441 464 443Income tax withheld at source -
prior year (b) 13,948 15,301 14,539 16,835Income tax withheld at source -
loan (b) 13,728 3,689 13,727 3,689ICMS 1,994 2,306PIS 1,727 2,390COFINS 1 7,956 11,002Others 1,244 844 3,153 1,238
32,916 31,666 62,265 61,444
Current 25,701 22,068 47,651 37,410Non-current 7,215 9,598 14,614 24,034
(a) Refers to income and social contribution taxes prepaid in the course of the year and previousyears. which will be offset against the income and social contribution taxes determined on thetaxable income.
(b) The balance of income tax withheld at source refers to amounts withheld on interest-earningbank deposits and related-party loans. These balances will be offset against the income andsocial contribution taxes payable.
Deferred taxes
Deferred income and social contribution taxes reflect future tax effects attributable to temporarydifferences between the tax bases of assets and liabilities and their carrying values.
The deferred tax was maintained at the subsidiaries due to the expectations of generating futuretaxable income, determined by a technical valuation approved by Management. The carrying value ofthe deferred tax asset is reviewed periodically and the projections are reviewed annually. If there aresignificant factors that change the projections, they are also reviewed by the Company during theyear.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
40 of 98
The Company and its subsidiaries adopted the Transitional Taxation Scheme (RTT) so that theamendments introduced by Law 11638 of December 28, 2007 and Articles 37 and 38 of Law 11941 of2009, which changed the procedure for recognizing revenue, costs and expenses used to calculatethe net income for the year defined in Art. 191 of Law 6404 of December 15, 1976, do not affect thecalculation of the taxable income and social contribution calculation base of companies that optedfor the Transitional Taxation Scheme - RTT. For tax purposes the accounting methods and criteria inforce at December 31, 2007 should be used.
The Company and its subsidiaries will not elect for the option provided in MP 627, and we believe itwill not generate any fiscal amendment to be adjusted in the financial statements.
The origin of the deferred income and social contribution taxes is presented below:
Parent company Consolidated
2013 2012 2013 2012(Re-
presented)
Non-current deferred chargesTax loss carryforwards and negative tax base 161,039 302,327 346,699Temporary differences - RTT 5,488Write-off of deferred charges - spin-off effect (25,395 ) (25,395 )Fair value - derivatives (21,244 ) (21,244 )
114,400 302,327 305,548
Non-current deferred liabilitiesTemporary differences - RTT 9,591 2,048
Breakdown of deferred tax by company:
2013 2012
Parent company 114,400Pecém II 85,708 62,161Itaqui 192,127 117,207Amapari 1,783Parnaíba 14,006 11,359Parnaíba II 8,703 421
Tax loss carryforwards and negative tax base 302,327 305,548
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
41 of 98
Changes in 2013 refer mainly to the provision of the balance of deferred tax assets of the Parent, ofR$ 114,400 and the creation of income tax and social contribution tax losses of the subsidiariesmentioned above of R$ 111,179.
At December 31, 2013 the taxes calculated on the adjusted net income consisted of IRPJ (rate of 15%and surcharge of 10%) and CSLL (rate of 9%). The reconciliation between the tax expense ascalculated by the combined statutory rates and the income and social contribution tax expensecharged against the result is presented below:
2013
Parentcompany Consolidated
Loss for the period before IRPJ/CSLL (828,055 ) (933,269 )Statutory rate 34% 34%
IRPJ/CSLL at the nominal rate (281,539 ) (317,311 )
Adjustments to determine effective rateParent company adjustment (*) 164,134 173,853
RTT adjustment - deferred income tax 117,405 40,211Write-off of Eneva deferred tax asset (a) 114,400 114,400
Income tax and social contribution expense, current 114,400 3,744
Deferred income and social contribution taxes 7,408
Total effect of tax on net income 114,400 11,152
Effective rate (13,82% ) (1,19% )Deferred tax asset not recognized
(a) Based on the expectation of future taxable income, determined by Parent technical studies andapproved by the Administration, the recognized deferred tax assets on tax losses and negativebasis of social contribution tax should be write-off on December 31, 2013 , under the currentdebt profile.
The Company has on December 31, 2013 an amount of R$ 647 million (R$ 336 million in 2012)due to tax loss carryforwards, resulting in a total tax credit not recognized in its financialstatements of R$ 220 million (R$ 114 million in 2012).
(*) Refers to portion of deferred taxes of subsidiaries which was not recorded, as there is no studydemonstrating its realization.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
42 of 98
2012
Parentcompany Consolidated
Loss for the period before IRPJ/CSLL (460,921 ) (497,330 )Statutory rate 34% 34%
IRPJ/CSLL at the nominal rate (156,714) (169,092 )Adjustments to determine effective rate:
Temporary differences 105,598 104,911Write-off deferred tax split CCX 25,395Others 1,305
Income tax and social contribution expense, current (1,921 )
Deferred income and social contribution taxes 25,721 64,797
Total effect of tax on net income 25,721 62,876
Effective rate (5.58% ) (12.64% )Deferred tax asset not recognized
Based on the estimated generation of future taxable earnings, by way of its subsidiaries the Companyexpects to recover these tax credits from 2015 onwards, as shown below:
2015 2016 2017 2018 2019 2020 2021 2022 2023 Total
Expected anualrealization ofdeferred taxes 20,355 24,430 24,236 22,527 38,407 57,034 43,057 55,220 7,469 292,736
The expected recoverability of the tax credits is based on the projection of future taxable incometaking into consideration business and financial assumptions at the year end. Accordingly, theseestimates may differ from the effective taxable income in the future due to the inherent uncertaintiesinvolving these estimates.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
43 of 98
12 Investments
(a) Composition of balances
Parent company Consolidated
2013 2012 2013 2012(Re-
presented)
Equity interests 3,130,881 2,215,012 941,758 833,860Future acquisition of investment 95 95 95 95
3,130,978 2,215,107 941,853 833,955
(b) Equity interests
The consolidated financial statements include the financial statements of the parent company and thecompanies the Company has the control of and Exclusive Funds. The balances of the main consolidatedaccount groups at December 31, 2013 and December 31, 2012 are:
2013
Equityinterest Current Non-current Current Non-current Shareholders' Net
Equity interests in % assets assets liabilities liabilities equity income
Porto do Pecém Geração de Energia S.A. 50.00% 290,867 3,906,638 548,838 2,487,934 1,160,732 (282,342 )Pecém II Geração de Energia S.A. 100.00% 170,228 2,029,084 221,660 1,346,518 631,134 (46,331 )Itaqui Geração de Energia S.A. 100.00% 153,100 2,924,724 285,496 1,724,724 1,067,603 (250,736 )Amapari Energia S.A. 51.00% 62,105 69,205 31,608 52 99,649 (3,619 )UTE Porto do Açú Geração de Energia S.A. 50.00% 7,341 51,248 6,064 3,124 49,402 (4,296 )Seival Sul Mineração Ltda. 70.00% 477 4,840 22 5,295 (792 )Sul Geração de Energia Ltda. 50.00% 29 13,947 8 832 13,136 (521 )Termopantanal Participações Ltda. 66.67% 9 400 (4 ) 2,726 (2,313 ) (2 )Parnaíba Geração de Energia Ltda. 70.00% 158,288 1,264,731 265,826 768,997 388,195 152Porto do Pecém Transportadora de
Minérios S.A. 50,00% 1.274 98 474 899 222OGMP Transporte Aérieo Ltda. 50.00% 368 130 498 410PO&M - Pecém Operação e Manutenção de
Geração Elétrica S.A. 50,00% 3.263 491 2,357 415 (324 )Seival Participações S.A. 50.00% 30 61,695 6 22,469 39,251 (624 )Parnaíba II Geração de Energia S.A. 100.00% 62,301 1,163,940 594,757 303,322 328,163 (16,806 )Eneva Participações S.A. 50.00% 116,364 388,463 203,084 44,480 257,263 (26,952 )Porto do Açú II Geração de Energia S.A. 50.00% 259 4,782 12 367 4,662 (4 )Parnaíba Participações S.A. 50.00% 200,833 399,256 233,955 85,464 206,788 14,076Parnaíba V Geração de Energia S.A 99.99% 9 1 108 (100 ) (111 )Parnaíba Gas Natural S.A. 33.33% 258,196 1,100,395 1,134,315 68,572 155,704 12,640MPX Investimentos S.A. 99.99% 2 11 (9 ) (12 )MPX Desenvolvimento S.A. 99.99% 8 303 10 490 (189 ) (201 )MPX Tauá II Energia Solar Ltda. 100.00% 64 69 (506 ) 44 596 (230 )MABE Construção e Administração de
Projetos Ltda. 50,00% 55.866 48,871 69,331 35,378 28 (94,169 )
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
44 of 98
2012
Equityinterest Current Non-current Current Non-current Shareholders' Net
Equity interests in % assets assets liabilities liabilities equity income
Porto do Pecém Geração de Energia S.A. 50.00% 442,065 3,716,461 471,408 2,464,001 1,223,117 (206,999)Pecém II Geração de Energia S.A. 99.70% 46,335 1,709,494 94,118 1,045,646 616,065 (22,753)Itaqui Geração de Energia S.A. 100.00% 136,865 2,633,492 246,786 1,746,493 777,078 (41,236)Amapari Energia S.A. 51.00% 47,197 98,923 42,449 103,671 9,018UTE Porto do Açu Energia S.A. 50.00% 420 57,712 3,632 54,500 (1,825)Seival Sul Mineração Ltda. 70.00% 558 4,482 24 5,016 (675)Sul Geração de Energia Ltda. 50.00% 251 13,157 211 13,197 (873)MPX Chile Holding Ltda. 50.00% 6,117 19,030 27,484 30,801 (33,138) (24,732)Termopantanal Participações Ltda. 66.67% 10 400 (4) 2,725 (2,311)Parnaíba Geração de Energia S.A. 70.00% 85,228 1,084,889 162,380 677,593 330,144 (11,314)Porto do Pecém Transportadora de
Minérios S.A. 50.00% 1,017 81 421 677 (376)OGMP Transporte Aéreo Ltda. 50.00% 668 13,038 61 13,645 (5,209)PO&M - Pecém Operação e Manutenção de
Geração Elétrica S.A. 50.00% 2,984 91 2,155 738 (272)Seival Participações S.A. 50.00% 117 49,896 105 11,178 38,730 (66)Parnaíba II Geração de Energia S.A. 100.00% 217,134 495,887 627,767 85,254 (746)Eneva Participações S.A. 50.00% 227,579 114,926 123,373 22,015 197,117 (30,389)Porto do Açú II Geração de Energia S.A. 50.00% 101 4,176 11 4,266Parnaíba Participações S.A. 50.00% 15,717 29,213 1,681 43,249 (368)Parnaíba V Geração de Energia S.A. 100.00% 1 1Parnaíba Geração e Comerc. de Energia S.A. 70.00% 1 1Parnaíba Gas Natural S.A. 33.33% 257,769 876,452 225,147 813,485 95,589 (102,328 )MPX Investimentos S.A. 100.00% 1 1MPX Desenvolvimentos S.A. 100.00% 363 151 214 608 (308) (309)MPX Tauá II Energia Solar Ltda. 100.00% 1 1
The balance of investments is as follows:
Parent company Consolidated
Investments 2013 2012 2013 2012(Re-
presented)
Porto do Pecém Geração de Energia S.A. 580,367 611,561 580,243 611,433Pecém II Geração de Energia S.A. 631,135 449,104Itaqui Geração de Energia S.A. 994,904 551,547Amapari Energia S.A. 50,821 52,872UTE Porto do Açu Energia S.A. 24,701 27,251 17,386 19,936Seival Sul Mineração Ltda. 3,707 3,511Sul Geração de Energia Ltda. 6,569 6,597 6,249 6,280Porto do Pecém Transportadora de
Minérios S.A. 449 338 449 338Parnaíba Gás Natural S.A.. 51,899 31,862 51,899 31,861Parnaíba Geração de Energia Ltda. 172,637 231,100OGMP Transporte Aéreo Ltda. 277 6,823 277 6,823Pecém Operação e Manutenção de Unidades
de Geração Elétrica S.A. - PO&M 207 369 207 369Seival Participações S.A. 19,625 19,364 19,625 19,364Parnaíba II Geração de Energia S.A. 328,162 85,254ENEVA Participações S.A. 159,685 128,406 159,685 128,406Açú II Geração de Energia S.A. 2,331 2,133 2,331 2,133Parnaíba V Geração de Energia S.A 1Parnaíba Geração e Comercialização de
Energia S.A. 1Parnaíba Participações S.A. 103,393 6,917 103,393 6,917ENEVA Investimentos S.A. 1MABE do Brasil 14 14Future acquisition of investment 95 95 95 95
3,130,978 2,215,107 941,853 833,955
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
45 of 98
(a) At December 31, 2013 the balance of the investment with the joint ventures and the subsidiariesMPX Chile Holding Ltda., ENEVA Desenvolvimento S.A. and Termopantanal ParticipaçõesLtda. was classified under unsecured liabilities in the non-current liabilities, due to the factthese companies had negative equity.
(b) On August 14, 2013 the Extraordinary General Meeting approved the split-off of ParnaíbaGeração de Energia S.A. with the net assets being transferred to Parnaíba III Geração deEnergia S.A. The split-off is a necessary step in the implementation of the venture andcommercial start-up of UTE Parnaíba III, via the transfer of the 5th generator turbine, with atotal capacity of 176.2 MW.
(c) The shareholders Eneva Energia S.A. and OGX Petróleo e Gás Participações S.A. approved thecapital reduction of the joint subsidiary OGMP Transporte Aéreo Ltda. on August 8, 2013.
(d) On October 30, 2013 the EGM approved the change of the associated company's name fromOGX Maranhão Petróleo e Gás S.A. to Parnaíba Gás Natural S.A.
The following is the composition of non-controlling interests in the equity and results of investees.
The balance of investments is as follows:
Attributable to non-controlling
Investments Share Net worth Result Net worth Result
Amapari Energia S.A. 51% 99,649 3,619 48,828 1,773Parnaíba I Gerão de Energia 70% 246,624 152 73,987 46Termopantanal Participações 67% 2,313 2 771 1Seival Sul Mineração 70% 5,295 792 1,588 238
Total 123,633 1,966
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
46 of 98
(c) Change in investment
Parent company
2013
Balance at Gain on Adjustment Balance atDecember Capital Equity increase in Capital Exchange of equity December
Direct subsidiaries % 31, 2012 subscription income interest reduction variance appraisal Spin-off Amortization 31, 2012
Porto do Pecém Geração de Energia S.A. 50.00 611,561 98,600 (141,171 ) 11,379 580,366Pecém II Geração de Energia S.A. 100.00 449,104 227,400 (46,331 ) 961 631,134Itaqui Geração de Energia S.A. 100.00 551,549 694,560 (250,736 ) (469 ) 994,904Amapari Energia S.A. 51.00 52,872 (2,051 ) 50,821Porto do Açu Energia S.A. 50.00 27,251 4,850 (7,400 ) 24,701Seival Sul Mineração Ltda. 70.00 3,511 750 (554 ) 3,707Sul Geração de Energia Ltda. 50.00 6,599 230 (261 ) 6,568Porto do Pecém Transportadora de Minérios S.A. 50.00 338 - 111 449Parnaíba Gás Natural S.A. 33.30 31,861 15,825 4,213 51,899Parnaíba Geração de Energia S.A.* 70.00 231,101 33,600 106 (92,170 ) 172,637OGMP Transporte Aereo 50.00 6,823 250 205 (7,000 ) 278Pecém Operação e Manutenção de Unidades de
Geração Elétrica S.A. - PO&M 50.00 367 (162 ) 207Seival Participações S.A. 99.90 19,365 573 (312 ) 19,626Açu II Energia S.A. 50.00 2,133 200 (2 ) 2,331ENEVA Participações S.A. 50.00 128,406 (15,074 ) 267 46,085 159,685Parnaíba Participações S.A. 50.00 6,917 43,355 7,036 46,085 103,393Parnaíba V Geração de Energia S.A. 99.99 1 (1) 0MABE do Brasil 50.00 14 14Eneva Tauá II Energia Solar Ltda.Eneva 100.00% 1 (1) 0ENEVAInvestimentos S.A. 99.99Parnaíba II Geração de Energia S.A. 100.00 85,254 259,715 (16,806 ) 328,163Future acquisition of investment 95 95
2,215,107 1,379,922 (469,189 ) 961 (7,000 ) 267 11,379 - (469 ) 3,130,978
(*) The effect refers to the transfer of the turbine from Parnaíba I to Parnaíba III.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
47 of 98
2012
Equity interests
Balance atDecember
31, 2012Paid-incapital
Equityincome
Spin-off CCXCarvão daColômbia
Transfer toMPX E. ON
Participações DividendsExchangevariation
Equityappraisal
adjustments
Balance atDecember
31, 2012
Porto do Pecém Geração de Energia S.A. 367,565 351,630 (103,500) (4,134) 611,561Pecém II Geração de Energia S.A. 376,189 95,600 (22,685) 449,104Itaqui Geração de Energia S.A. 443,947 148,836 (41,236) 551,547Amapari Energia S.A. 50,313 4,599 (2,040 ) 52,872Porto do Açu Energia S.A. 36,293 16,006 (2,114) (22,934) 27,251Seival Sul Mineração Ltda. 3,278 706 (473) 3,511Sul Geração de Energia Ltda. 9,401 4,410 (686) (6,526) 6,599Eneva Comercializadora de Energia Ltda. 19,122 4,000 421 (23,543)MPX Áustria GmbH 3,919 84,429 (2,839) (55,709) (29,800)Solar Empreendimentos Ltda. 8,004 650 (105) (8,549)Porto do Pecém Transportadora de Minérios S.A. 526 (188) 338MPX Comercializadora de Combustíveis Ltda. 9,285 (253) (9,032)OGX Maranhão Petróleo e Gás Ltda. 54,467 11,500 (34,106) 31,861UTE Parnaíba Geração de Energia S.A. 107,231 131,790 (7,920) 231,101Nova - Sistemas de Energia Ltda. 2,425 100 (2,525)OGMP Transporte Aereo Ltda. 7,567 1,860 (2,604) 6,823Pecém Operação Manutenção e Operação S.A. 292 209 (134) 367Seival Participações S.A. 38,507 269 (62) (19,349) 19,365UTE Porto do Açu II Energia S.A. 4,215 (2,082) 2,133CCX Brasil Participações S.A. 750,208 (76) (750,132)Eneva Participações S.A. 149,294 (15,195) (5,693) 128,406Centennial Amapá 64 (33) (31)Parnaíba Participações S.A. 7,101 (184) 6,917UTE Parnaíba V Geração de Energia S.A. 1 1Parnaíba Geração Comercialização de Energia S.A. 1 1MPX Investimentos S.A. 1 (1)UTE Parnaíba II Geração de Energia S.A. 86,000 (746) 85,254MPX Tauá II Energia Solar Ltda. 1 1Future acquisition of investment 95 95
1,538,331 1,848,976 (230,120) (750,163) (150,249) (2,040 ) (29,800) (9,827) 2,215,108
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
48 of 98
13 Property, plant and equipment
(a) Composition of balances
Consolidated
In use
2013
Land
Buildings, civilworks and
improvementsMachinery and
equipment IT equipment VehiclesFurniture
and fixturesGas
pipelineProvision for
"Impairment"Cost of
disassemblyPP&E in
progress Spin-off Total
Depreciation rate % a.a. 4 7 17 20 10
CostBalance at December 31, 2012 3,113 18,471 75,162 4,586 1,294 6,269 12,169 (12,169 ) 3,993 5,478,044 5,590,931
48,264Balance at December 31, 2012 3,113 18,471 75,162 4,586 1,294 6,269 12,169 (12,169 ) 3,993 5,478,044 5,590,931Additions 40,522 33,767 485 584 1,865 (39 ) 1,441,983 (124,118 ) 1,395,050Write-offs (7,742 ) (1,241 ) (3 ) (120 ) (54 ) (9,160 )Transfers 4,732 3,107,904 2,491,383 35 354 (5,603,522 ) 885
Balance at December 31, 2013 7,845 3,159,154 2,599,071 5,104 1,757 8,434 12,169 (12,169 ) 3,954 1,316,505 (124,118 ) 6,977,706
DepreciationSaldo em 31 de dezembro de 2012 (1,496 ) (15,826 ) (1,280 ) (434 ) (1,500 ) (20,535 )
Balance at December 31, 2012 (1,496 ) (15,826 ) (1,280 ) (434 ) (1,500 ) (20,535 )Additions (67,470 ) (69,376 ) (432 ) (307 ) (749 ) (138,335 )Write-offs 518 93 6 616Transfers
Balance at December 31, 2012 (68,448 ) (85,202 ) (1,712 ) (649 ) (2,243 ) (158,254 )
Net book valueBalance at December 31, 2012 3,113 16,975 59,336 3,306 860 4,769 12,169 (12,169 ) 3,993 5,478,044 5,570,399
Balance at December 31, 2013 7,845 3,090,707 2,513,869 3,392 1,109 6,190 12,169 (12,169 ) 3,954 1,316,505 (124,118 ) 6,819,454
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
49 of 98
2012 - Re-presented
Land
Buildings, civilworks and
improvementsMachinery and
equipment IT equipment Vehicles
Furnitureand
fixturesGas
pipelineProvision for
"Impairment"Cost of
disassemblyPP&E in
progress Spin-off
Depreciation rate % a.a. 4 7 17 20 10
CostBalance at December 31, 2012 44,424 20,163 77,918 4,112 821 4,450 12,169 (12,169 ) 1,946 3,824,067 3,977,901
13,284Balance at December 31, 2012 44,424 20,163 77,918 4,112 821 4,450 12,169 (12,169 ) 1,946 3,824,067 3,977,901Additions 245 18,064 1,570 473 1,966 172 1,886,616 1,909,106Write-offs (41,344 ) (13,039 ) (3,000 ) (1,095 ) (237,610 ) (296,088 )Transfers 32 11,103 (17,820 ) (147 ) 6,847 15
Balance at December 31, 2013 3,113 18,472 75,162 4,587 1,294 6,269 12,169 (12,169 ) 2,118 5,479,920 5,590,934
DepreciationBalance at December 31, 2012 (847 ) (12,365 ) (693 ) (298 ) (719 ) (14,922 )
Balance at December 31, 2012 (847 ) (12,365 ) (693 ) (298 ) (719 ) (14,922 )Additions (608 ) (3,393 ) (587 ) (136 ) (885 ) (5,608 )Write-offsTransfers (41 ) (68 ) 104 (4 )
Balance at December 31, 2012 (1,496 ) (15,825 ) (1,280 ) (434 ) (1,500 ) (20,535 )
Net book valueBalance at December 31, 2012 44,424 19,316 65,553 3,419 523 3,731 12,169 (12,169 ) 1,946 3,824,067 3,962,979
Balance at December 31, 2013 3,113 16,976 59,337 3,307 861 4,769 12,169 (12,169 ) 2,118 5,479,920 5,570,399
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
50 of 98
Machinery and equipment
Basically relates to the UTEs Amapari Energia S.A., Itaqui, Parnaíba and Pecém II, which came intooperation in November 2008, February 2013, March 2013 and October 2013 respectively. Assetdepreciation is based on the concession term and calculated by the straight line method at the ratesdetermined by Normative Resolution 474 issued February 7, 2012 by the National Electric EnergyAgency - ANEEL. For the estimated portion of the investments made and not amortized ordepreciated by the end of the concession, a new depreciation or amortization rate is calculated andrecorded in income monthly, so that a value equal to zero is obtained at the end of the concession.
Buildings, Civil Works and Improvements
Basically relates to the UTEs Itaqui, Parnaíba and Pecém II, which came into operation in February2013, March 2013 and October 2013 respectively. Depreciation follows the same procedure andcriteria described in the item Machinery and equipment.
Land
On June 30, 2010 Parnaíba Geração de Energia S.A. acquired land to build the venture for R$ 3,113,which it recorded under "Land". Following the operational start-up of the Porto do Itaqui plant, wetransferred R$ 4,731 from property, plant and equipment in progress to property, plant andequipment in use. The amounts are recorded in accordance with Technical Pronouncement CPC 27 -Property, Plant and Equipment.
Property, plant and equipment in progress
The expenses incurred on advances made for reserves and equipment acquisitions to build thethermal power plants of the companies Pecém II Geração de Energia S.A., Itaqui Geração de EnergiaS.A. and Parnaíbas I and II are transferred to the respective accounts of property, plant andequipment in use, following the approval of the declaration of commercial operation (DCO). Thesesubsidiaries, Pecém II Geração de Energia S.A., Itaqui Geração de Energia S.A, and MABEConstrução e Administração de Projetos Ltda. signed EPC agreements ("Engineering, Procurementand Construction") in the form of a global turn key operation to build the power stations. Asestablished in the respective agreements, 15% of each advance made should be withheld as aguarantee for delivery of the power station, to be disbursed in the course of 2013, if MABE presentsbank guarantees. It should be noted that it is not known when this withheld portion of the advancewill be applied in the construction of the plant. At December 31, 2013 the total guarantees retainedby these subsidiaries amount to R$ 52,640 (R$ 77,374 at December 31, 2012) and have beenrecorded under the respective subsidiary's current liabilities and presented in the consolidatedfinancial statements under "Contractual retentions".
UTEs Parnaíba I and II signed with Duro Felguera do Brasil Desenvolvimento de Projetos Ltda. andInitec do Brasil Engenharia e Construções Ltda. respectively EPC agreements (Engineering,Procurement and Constrution) in the form of a global turn key operation to build the power stations.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
51 of 98
The labor costs of workers directly allocated to the construction of the Parnaíba II plant, whichamounts to R$ 20,038 at December 31, 2013 (R$ 4,779 at December 31, 2012), is being capitalized.
In 2013 the Itaqui, Pecém II and part of the Parnaíba complex came into operation and thecorresponding amounts of property, plant and equipment in progress were transferred to therespective accounts of property, plant and equipment in use. At December 31, 2013 the remainingbalance of property, plant and equipment in progress primarily consists of the Parnaíba II project,which is forecast to come into operation in 2014.
On December 31, 2013, the capitalized costs of consolidated loans because of the construction inprogress account for the amount of R$ 117,926 (2012 - R$ 405,526), as follows:
Parnaíba I Parnaíba II Itaqui Pecem II Total
Average rate in 2013 (per annum - a.a.) 9,5% 10% 8,5% 8,5%Capitalized interest - 2013 6,683 72,328 13,683 25,232 117,926Capitalized interest - 2012 95,706 40,955 175,735 93,130 405,526
14 Intangible assets
(a) Composition of balances
Consolidated
Intangible assets in use
2013
Computerprograms
and licences
Goodwill onacquisition of
investmentsConcessions
and CEARsUsagerights
Intangibleassets inprogress Total
Amortizaton rate % a.a. 20 20
CostBalance at December 31, 2012 5,215 183,448 12,900 167 201,730
Balance at December 31, 2012 5,215 183,448 12,900 167 201,730Additions 5,224 15,470 251 270 21,214Write-offsTransfers 6,613 (7,061 ) (436 ) (885 )
Balance at December 31, 2013 17,053 15,470 183,448 6,089 222,059
AmortizationBalance at December 31, 2012 (1,965 ) (1,965 )
Balance at December 31, 2012 (1,965 ) (1,965 )Additions (6,244 ) (469 ) (6,713 )Write-offsTransfers
Balance at December 31, 2012 (8,209 ) (469 ) (8,677 )
Net book valueBalance at December 31, 2012 3,251 15,470 183,448 12,861 166 215,236
Balance at December 31, 2013 8,843 15,001 183,448 6,089 213,381
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
52 of 98
2012 – Re-presented
Computerprograms and
licences
Goodwill onacquisition of
investmentsConcessions
and CEARsUsagerights
Intangibleassets inprogress Total
Amortizaton rate % a.a. 20 20
CostBalance at December 31, 2012 4,093 15,470 222,459 26,180 268,202
Balance at December 31, 2012 4,093 15,470 222,459 26,180 268,202Additions 1,761 183,488 1,307 67 186,623Write-offs (211,430) (26,180) (237,610)Transfers (639) 525 99 (15)
Balance at December 31, 2013 5,215 15,470 183,488 12,861 166 217,200
AmortizationBalance at December 31, 2012 (1,248) (1,248)
Balance at December 31, 2012 (1,248) (1,248)Additions (721) (721)Write-offsTransfers 5 5
Balance at December 31, 2012 (1,964) (1,964)
Net book valueBalance at December 31, 2012 2,845 15,470 222,459 26,180 266,954
Balance at December 31, 2013 3,251 15,470 183,488 12,861 166 215,236
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
53 of 98
(b) Goodwill on investments
On October 14, 2008 Eneva S.A. acquired the entire capital of Itaqui Geração de Energia S.A. fromEDP Energias do Brasil S.A. in an acquisition that involved the swap of a 50% interest in Porto doPecém Geração de Energia S.A. for the mentioned quotas. This transaction generated goodwill forEneva S.A. of R$ 15,470, which is being presented under investments in the parent company'sinvestment financial statements and under intangible assets in the consolidated financialstatements. This goodwill is based on the expected future yield and is amortized over the termestablished in Ordinance authorization 177 issued May 12, 2008.
15 Related parties
The main balances of assets and liabilities at December 31, 2013 and December 31, 2012 related torelated-party transactions, as well as the transactions that influenced the income for the period,relate to transactions between the Company and its direct and indirect subsidiaries, affiliates and keymanagement personnel, which were conducted in accordance with the terms agreed by the parties.
(a) Controlling Shareholder
The Company's control is jointly exercised by Mr. Eike Fuhrken Batista and DD Brazil HoldingsS.À.R.L (fully controlled by E.ON AG), which respectively hold 23.9% and 37.9% of the commonshares.
(b) Executives
The Company is managed by a Board of Directors and an Executive Board, pursuant to the dutiesand powers vested by its Bylaws in accordance with corporate law.
(c) Related companies
The Company's main affiliated companies are: EBX Holding Ltda.,E.ON AG, Óleo e GásParticipações S.A., Prumo Logística S.A., MMX Mineração e Metálicos S.A., OSX Brasil S.A., OMXOperações Marítimas Ltda., CCX Brasil Participações S.A., MMX Chile S.A., LLX Açú OperaçõesPortuárias S.A. and AVX Táxi Aéreo Ltda., in addition to its subsidiaries and associated companies.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
54 of 98
At December 31, 2013, the balances of assets, liabilities and effects on income of related-partytransactions are as follows:
Assets
Parent company Consolidated
2013 2012 2013 2012
(Re-presented)
Pecém II Geração de Energia S.A. (c) 324,216 1,108Termopantanal Ltda. (a) 7,683 7,683Termopantanal Ltda. (a) (7,453 ) (7,453 )Termopantanal Participações Ltda. (a) 457 457ENEVA Comercializadora de Energia S.A. (e) 653 175 14,387 174Parnaíba Geração de Energia S.A. (f) 5,159 2,641Itaqui Geração de Energia S.A. (g) 404,621 374,965MPX Sul Energia S.A. (m) 181 95 181 95Porto do Açú Energia S.A. (m) 241 251 241 251Parnaíba II Geração de Energia S.A. (j) 2,977 302ENEVA Comercializadora de Combustível Ltda. (m) 327 95 327 95Seival Participações S.A. (m) 66 66EBX Holding Ltda. (b) 12,542 1,134 12,542 1,134Pecém Operação e Manutenção Elétrica S.A. (j) 1,547 1,438 1,547 1,438ENEVA Participações S.A. (n) 5,341 6,111 5,341 6,111Porto do Pecém Geração de Energia S.A. (k) 258,749 133,489 260,268 133,489ENEVA Desenvolvimento (l) 346 908Seival Sul Mineração Ltda. (m) 10 9Parnaíba Participações S.A. (m) 1,131 1,131ENEVA Investimentos S.A. (m) 11Parnaíba V Geração de Energia S.A. (m) 119Tauá II Geração de Energia Ltda. 44Parnaíba III Geração de Energia S.A.Parnaíba IV Geração de Energia S.A. 14,219 14,219Parnaíba Gás Natural S.A. 204,794 206,138MABE da Brasil 11,559 11,559Seival Geração de Energia S.A. 195 195Advances for future capital increase for
subsidiaries (b) 206,678 419,426 150 12,425
1,456,347 942,900 528,227 155,278
Non-current 1,456,347 942,900 528,227 155,278
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
55 of 98
Liabilities
Parent company Consolidated
2013 2012 2013 2012
(Re-presented)
EBX Holding Ltda. (b) 2,772 2,664 2,824 3,975ENEVA Comercializadora de
Energia Ltda. (e) 81 1,116 138,478 23,904Copelmi Mineração Ltda. (d) 158 14Porto do Pecém Geração de Energia S.A. (k) 2,502 430ENEVA Comercializadora de
Combustíveis Ltda. (m) 136ENEVA Participações S.A. (n) 3,919 2,376 3,919 2,376Tauá Geração de Energia Ltda. 444 367 444 367Porto do Pecém Transportadora
e Minérios S.A. 70Petra Energia S.A.(o) 80,781Parnaíba Gás Natural S.A.(p) 274 45,128Parnaíba Participações S.A. 27,000 27,000DD Brazil 6,416
34,489 6,523 307,720 31,202
Current 6,523 30,772Non-current 34,489 307,720 430
Results
Parent company Consolidated
2013 2012 2013 2012
(Re-presented)
EBX Holding Ltda. (b) 3,675 (20,372 ) (13,280 ) (24,697 )Pecem II Geração de Energia S.A. (c) 20,637 864 (36,152 ) (1,233 )ENEVA Comercializadora de Energia S.A. (e) 931 (8,877 ) (160,728 ) (8,877 )Parnaíba Geração de Energia S.A. (f) 1,656 2,153 (2,233 ) (340 )Itaqui Geração de Energia S.A. (g) 33,868 12,013 (119,315 ) 9,490MMX Mineração e Metálicos S.A. 85 85OGX Petróleo e Gás Ltda. 364 364OSX Brasil S.A. 162 162LLX Logística S.A. 140 140MPX Sul Energia S.A. (m) 76 50 76 50Porto do Açú Energia S.A. (m) 142 310 142 310ENEVA Solar Empreendimentos Ltda. - (246 ) - (246 )ENEVA Comercializadora de Combustível Ltda. (m) 136 327 136 327Seival Participações S.A. (m) 130 21 130 21Pecém Operação e Manutenção Elétrica S.A. (i) 129 50 (19,321 ) 50Parnaíba II Geração (j) 1,588 800 (10,879 ) 800Parnaíba Participações (m) 32 32ENEVA Participações S.A. (n) (1,264 ) 3,022 (1,264 ) 3,022Porto do Pecém Geração de Energia S.A. (k) 13,029 60 13,029 60ENEVA Desenvolvimento S.A.(l) 81Parnaíba III Geração de Energia S.A. (m) 508 508Parnaíba V Geração de Energia S.A. (m) 123MABE Construção e Administração de Projetos Ltda. (m) 342 (5,087 )ENEVA Investimentos S.A. (m) 11Copelmi Mineração Ltda. (d) 11 (55 )Parnaíba IV Geração de Energia S.A. (m) 117 117Petra Energia S.A.(o) 85,015OGX Petroleo e Gás S.A.(p) 136,438
75,916 (9,042 ) (132,657 ) (20,535 )
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
56 of 98
(a) Loan agreement executed with Eneva S.A. (lender) subject to monthly interest (101% of CDI)and with an unfixed term of maturity. Eneva S.A. has made a provision of R$ 7,453 for thedevaluation of its 66.67% investment in Termopantanal Participações Ltda.
(b) The Company and its subsidiaries have operational and financial cost sharing agreements withthe companies EBX Holding S.A. , involving monthly collections made through trade notes paidaccording to understandings between the parties (average DPO of 30 to 60 days). The effect onnet income at December 31, 2013 is R$ (13,280) (R$ (34,682) at December 31, 2012).
(c) Revenue from reimbursement of operational, financial and project implementation costs. AtDecember 31, 2013 the effect on net income is R$ (36,152).
(d) Reimbursement of administrative costs related to the 30% interest held by Copelmi MineraçãoLtda. in the share capital of Seival Sul Mineração, with an effect on net income of R$ 11.
(e) The balance consists of operational and financial cost sharing agreements with Eneva S.A.,Itaqui Geração de Energia S.A., Parnaíba II Geração de Energia S.A. and Pecém II Geração deEnergia S.A., involving monthly collections made through trade notes paid according tounderstandings between the parties (average DPO of 30 to 60 days). At December 31, 2013 theeffect on net income is R$ (160,728).
(f) The balance consists of revenue from reimbursement of feasibility study costs. At December 31,2013 the effect on net income is R$ (2,233).
(g) The balance consists of: (i) revenue from reimbursement of operating and finance activities andproject implementation costs; at December 31, 2013 the effect on net income is R$ (119.3154).
(h) Balance consisting of advances for future capital increase (AFACs) of its subsidiaries frominvestments to non-current assets, which are irrevocable and irreversible. However, no fixedvalue has been defined for the number of shares in the capital increase, in contravention of CPC38. The following AFACs are outstanding at December 31, 2013 with the following companies:
Subsidiaries 2013 2012
Porto do Açu Energia S.A.MPX Seival Participações S.A.Parnaíba Geração de Energia S.A. 118,000Parnaíba V Geração de Energia S.A. 10Itaqui Geração de Energia S.A. 87,700 241,000Parnaíba Participações S.A. 12,426Pecém II Geração de Energia S.A. 166,000ENEVA Investimentos S.A. 3OGMP Transporte Aéreo Ltda. 150Tauá II Geração de Energia Ltda. 815
206,678 419,426
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
57 of 98
(i) The balance consists of: (i) loan agreement executed in December 2011 with Eneva S.A. (lender)subject to monthly interest (110% of CDI) and with a fixed term of maturity of December 31,2013. At December 31, 2013 the effect on net income is R$ 129. (ii) operational and financialcost sharing agreements with Parnaíba Geração de Energia S.A., involving monthly collectionsmade through trade notes paid according to understandings between the parties (average DPOof 30 to 60 days). At December 31, 2013 the effect on net income is R$ (19,450).
(j) Revenue from reimbursement of operational, financial and project implementation costs. AtDecember 31, 2013 the effect on net income is R$ (10,879).
(k) Loan agreement made on September 24, 2012 with Eneva S.A. (lender) subject to monthlyinterest (105% of CDI) and with a term of maturity of 1 (one) day after full repayment of loan bylender. The company determined revenue balance at December 31, 2013 of R$ 13. 029.
(l) The balance consists of: (i) revenue from reimbursement of project management costs; atDecember 31, 2013 the effect on net income is R$ 46 and (ii) loan agreement made onNovember 26, 2012 with Eneva S.A. (lender) subject to monthly interest (104% of CDI) andwith a term of maturity of 1 (one) day after full repayment of loan by lender. At December 31,2013 the effect on net income is R$ 35.
(m) Revenue from reimbursement of project implementation costs.
(n) Revenue from reimbursement of project implementation costs. At December 31, 2013 the effecton net income is R$ (1,264).
(o) The balance consists of: (i) costs relating to the gas purchase agreement and leasing of the gastreatment plant's capacity, between Parnaíba and Petra. The effect on net income is R$ 85,015and (ii) Advance for future capital increase of R$ 23,571 between Petra and Parnaíba.
(p) Costs relating to the gas purchase agreement and leasing of the gas treatment plant's capacity,between the companies. The effect on net income is R$ 136,438.
(d) Compensation of the Board of Directorsand Executive Board members
In accordance with Law 6404/1976 and the Company's bylaws, the shareholders will establish themanagers' overall annual remuneration at the General Meeting. The Board of Directors willdistribute the amount among the directors.
The annual compensation of officers and the Board of Directors is presented below:
Parent company Consolidated
2013 2012 2013 2012(Re-presented)
Immediate benefitsSalaries 4,565 5,470 9,449 9,698Stock options granted 350,514 321,904 350,514 321,904
355,079 327,374 359,963 331,602
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
58 of 98
See below the minimum, average and maximum individual annual compensation of the Board ofDirectors and Officers, in R$:
Consolidated
2013 2012 - Re-presented
Minimum Average Maximum Minimum Average Maximum
Board of Directors 16,999 62,227 96,000 40,000 51,667 90,000Officers 122,451 822,660 1,815,721 210,766 367,602 696,505
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
59 of 98
16 Borrowings and financing
At December 31, 2013 and 2012 the borrowing taken from financial institutions are as follows:
Consolidted
2013 2012
Company Creditor Currency Interest rates MaturityEffective
rateTransaction
costsCosts to
appropriate Principal Interest TotalTransaction
costsCosts to
appropriate Principal Interest Total
Itaqui BNDES (Direto) (a) R$ TJLP+2,78% 15.06.26 2,89 11,182 9,913 830,630 2,586 823,304 11,182 10,541 898,472 2,772 890,703Itaqui BNB (b) R$ 10,00% 15.12.26 10,14 2,892 2,727 201,977 857 200,107 2,892 2,816 202,322 859 200,365Itaqui BNDES (Indireto) (c) R$ IPCA + TR BNDES+ 4,8% 15.06.26 4,80 1,475 1,473 109,302 6,041 113,870 1,475 1,475 111,299 31,378 141,202Itaqui BNDES (Indireto) (d) R$ TJLP+4,8% 15.06.26 4,94 2,023 1,953 162,052 632 160,731 2,023 2,000 175,016 669 173,685Pecém II BNDES (Direto) (e) R$ TJLP+2,18% 15.06.27 7,24 7,803 6,091 710,327 2,054 706,290 7,803 6,854 695,027 2,002 690,175Pecém II BNDES (Direto) (f) R$ IPCA+ TR BNDES + 2,18% 15.06.27 13,51 1,740 1,294 131,607 42,840 173,153 1,740 1,482 124,439 25,814 148,772Pecém II BNB (g) R$ 10,00% 31.01.28 10,30 4,287 3,620 250,000 4,070 250,450 4,164 3,773 235,000 3,826 235,053Parnaíba I BRADESCO (h) R$ CDI+3,00% 18.12.14 4,49 4,593 48,000 117 48,117 4,593 1,571 60,000 5,634 64,063Parnaíba I Banco Itaú BBA (i) R$ CDI+3,00% 15.04.15 3,44 11,516 60,670 776 61,446 8,917 4,646 65,000 7,675 68,029Parnaíba I BNDES (Direto) (j) R$ TJLP+1,88% 15.06.27 2,16 16,867 16,860 493,444 1,370 477,954 2,998 2,998 495,676 392 493,070Parnaíba I BNDES (Direto) (k) R$ IPCA + TR BNDES + 1,88% 15.07.26 2,17 6,953 6,663 215,988 10,408 219,733 1,236 1,237 204,388 38 203,189Parnaíba II Banco Itaú BBA (l) R$ CDI+3,00% 30.12.14 200,000 146 200,146 100,000 8,189 108,189Parnaíba II Banco HSBC (m) R$ CDI+3,00% 31.12.13 125,000 10,236 135,236Parnaíba II Banco HSBC (m) R$ CDI+3,00% 31.12.13Parnaíba II CEF (n) R$ CDI+3,00% 30.12.14 280,000 286 280,286 325,000 21,523 346,523Parnaíba II BNDES (o) R$ TJLP+2,40% 15.06.15 3,619 3,619 280,700 223 277,304 0 0 0ENEVA S.A. Banco Itaú BBA (p) R$ CDI+2,65% 16.12.14 105,790 503 106,293 105,790 368 106,158ENEVA S.A. Notas Promissórias - 1ª Emissão (q) R$ CDI+1,50% 15.12.13 300,000 11,595 311,595ENEVA S.A. Banco Citibank (r) R$ CDI+2,95% 22.09.14 101,250 3,107 104,357 101,250 2,042 103,292ENEVA S.A. Banco Citibank (s) US$ LIBOR 3M + 1,26% 27.09.17 117,130 20 117,150 102,175 18 102,193ENEVA S.A. Notas Promissórias - 2ª Emissão (t) R$ CDI+1,50% 09.12.13 300,000 1,005 301,005ENEVA S.A. Notas Promissórias - 3ª Emissão (u) R$ CDI+2,95% 25.12.13ENEVA S.A. Banco BTG Pactual (v) R$ CDI+3,75% 09.12.14 101,912 792 102,705 101,912 371 102,283ENEVA S.A. Banco BTG Pactual (w) R$ CDI+3,75% 09.06.15 350,000 2,562 352,559ENEVA S.A. Banco BTG Pactual (x) R$ CDI+3,75% 09.12.14 370,000 1,196 371,196ENEVA S.A. Banco HSBC (y) R$ CDI+2,75% 12.12.14 303,825 1,747 305,572ENEVA S.A. Banco Citibank (z) R$ CDI+4,00% 03.11.14 42,000 879 42,879ENEVA S.A. Banco Citibank (aa) R$ CDI+4,00% 09.12.14 100,000 792 100,792ENEVA S.A. Banco Itaú BBA (bb) R$ CDI+2,65% 05.12.14 200,000 1,618 201,618ENEVA S.A. Banco Itaú BBA (cc) R$ CDI+2,65% 09.12.14 210,000 1,499 211,499ENEVA S.A. Banco Santander (dd) R$ CDI+3,25 15.01.15 66,667 336 67,003ENEVA S.A. Morgan Stanley (ee) R$ CDI+3,25 15.01.15 66,667 336 67,003ENEVA S.A. Banco Itaú BBA (ff) R$ CDI+3,25 15.01.15 66,667 336 67,003
74,950 54,213 6,176,605 88,129 6,210,520 49,023 39,393 4,827,766 136,406 4,924,780
Costs toappropriate Principal Interest Total
Costs toappropriate Principal Interest Total
Current 2,606 2,322,843 87,906 2,408,142 6,984 1,716,403 110,555 1,819,974Non-current 51,607 3,853,762 223 3,802,378 32,409 3,111,363 25,852 3,104,806
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
60 of 98
The summary below shows the composition of the borrowings of the joint subsidiary Porto do Pecém Geração de Energia S.A. and the indirect subsidiariesMPX Chile Holding Ltda., Parnaíba III Geração de Energia S.A. and Parnaíba IV Geração de Energia S.A. As a result of the new consolidation rulesintroduced by IFRS 11, from 2013 we are no longer obliged to present them in the financial statements:
2013 2012
Company Creditor Currency Interest rates Maturity Effective rateTransaction
costCosts to
appropriate Principal Interest TotalTransactio
n costCosts to
appropriate Principal Interest Total
Pecém I (50%) BNDES (Direto) (gg) R$ TJLP + 2,77% 15.06.26 TJLP + 3,09 8.461 4.844 740.449 2.312 737.918 8.461 5.644 799.685 2.475 796.516Pecém I (50%) BID (hh) US$ LIBOR + 3,50% 15.05.26 LIBOR + 4,67 8.808 5.296 158.142 779 153.625 8.705 6.196 143.974 740 138.518Pecém I (50%) BID (ii) US$ LIBOR + 3,00% 15.05.22 LIBOR + 4,16 8.939 5.374 184.506 791 179.922 8.814 6.001 173.716 782 168.498Chile (50%) Banco Credit Suisse (jj) US$ 8,125% 15.04.15 10.519 183 10.702 14.907 267 15.173Chile (50%) Banco Credit Suisse (kk) US$ 8,000% 15.04.15 7.013 120 7.133 10.232 175 10.408Parnaíba IV (35%) Banco BTG Pactual (ll) R$ CDI + 2,28% 29.01.14 24.500 1.796 26.296Parnaíba III (35%) Banco Bradesco (mm) R$ CDI + 2,53% 31.01.14 42.000 493 42.493
26.208 15.514 1.167.129 6.474 1.158.089 25.980 17.841 1.142.514 4.439 1.129.113
Costs toappropriate Principal Interest Total
Costs toappropriate Principal Interest Total
Current 2.481 160.876 6.475 164.870 2.609 88.082 4.439 89.912Non-current 13.033 1.006.253 993.219 15.232 1.054.432 1.039.201
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
61 of 98
Porto do Itaqui Geração de Energia S.A. (Itaqui)
(a) The National Social and Economic Development Bank ("BNDES") released the entire R$ 784 millionof the long-term financing to Itaqui relating to subcredits A, B and C, incurring an annual cost ofTJLP + 2.78%. The financing facility has a term of 17 years, with 14 years repayment and a graceperiod on the principal until July 2012. Subcredit D, intended for social investments (BNDES Social)of R$ 13.7 million, only incurs TJLP and R$ 11.7 million has been disbursed to date. The "BNDESSocial" facility has a total term of 9 years, with 6 years repayment and a grace period until July 2012.The interest earned during the grace period was capitalized along with the amounts paid out. Thebalance of the principal at December 31, 2013 therefore stands at R$ 830.6 million. The interest onthese loans was capitalized during the construction phase. This financing is secured by thetraditional guarantee for project finance.
(b) To top up the funding from the BNDES, Itaqui took out financing from BNB-FNE, worth a totalR$ 203 million under which the last payment was released on July 28, 2011, completing thefinancing. The BNB financing has a total term of 17 years, with 14 years repayment and a graceperiod on the principal until July 2012. The interest charge is 10% p.a. The funding has aperformance bonus (15%), which consequently reduces the cost to 8.5% per annum. This financing issecured by the traditional guarantee for project finance.
(c) R$ 99 million of this indirect BNDES line has been released to Itaqui consisting of subcredits A, B, C,D and E. This part of the financing has a total term of 17 years, with 14 years repayment and a graceperiod on the principal and interest of until July 2012. The loan incurs IPCA + BNDES Referencerate + 4.8% p.a. during the construction stage and IPCA + BNDES Reference rate + 5.3% during theoperational stage. The interest earned during the grace period was capitalized along with theamounts paid out. The balance of the principal at December 31, 2013 stands at R$ 109.3 million. Theinterest on these loans was capitalized during the construction phase. This financing is secured bythe traditional guarantee for project finance.
(d) The entire subcredit F, of the financing mentioned in the previous item equal to R$ 141.8 million,has been passed through to Itaqui. This part of the loan has a total term of 17 years, with 14 yearsrepayment and a grace period on the principal and interest until July 2012. The financing incursTJLP + 4.8% p.a. during the construction stage and TJLP + 5.3% during the operational stage. Theinterest earned during the grace period was capitalized along with the amounts paid out. The balanceof the principal at December 31, 2013 stands at R$ 162.0 million. The interest on these financing wascapitalized during the construction phase. This financing is secured by the traditional guarantee forproject finance.
MPX Pecém II Geração de Energia SA (Pecém II)
(e) By December 31, 2013 Pecém II had received R$ 615.3 million of the R$ 627.3 million foreseen insubcredits A, B, C, D and L of the long-term financing contract with the BNDES (in nominal R$,excluding interest during the construction). These subcredits have a total term of 17 years, with 14years repayment and a grace period on the principal and interest until July 2013. The financingincurs LTIR + 2.18% p.a. The interest earned during the grace period was capitalized along with theamounts paid out. The balance of the principal at December 31, 2013 stands at R$ 710.3 million. Thisfinancing is secured by the traditional guarantee for project finance.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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(f) Pecém II received R$ 110.1 million referring to subcredits E, F, G, H and I of the long-term financingcontract with the BNDES mentioned in the item above. These subcredits have a total term of 17years, with 14 years repayment and a grace period on the principal and interest until June 2014. Thefinancing incurs IPCA + BNDES Reference rate + 2.18% p.a. Subcredit J, of R$ 22 million, whichcomprised this financing line, was transferred in April 2012 to subcredit A of the previous item. Thebalance of the principal at December 31, 2013 stands at R$ 131.6 million. This financing is secured bythe traditional guarantee for project finance.
(g) To top up the funding from the BNDES, Pecém II took out financing from BNB with FNE funding,worth a total R$ 250 million, which has been disbursed in its entirety. The BNB financing has a totalterm of 17 years, with quarterly interest and 14 years repayment and a grace period on the principaluntil February 2014. The interest charge is 10% p.a. The funding has a performance bonus (15%),which consequently reduces the cost to 8.5% per annum. This financing is secured by the traditionalguarantee for project finance.
UTE Parnaíba Geração de Energia SA (Parnaíba I)
(h) On December 27, 2011 Parnaíba I borrowed R$ 75 million under a CCB loan (Bank Credit Note) withBRADESCO, which was guaranteed by the parent company. Taken out to finance the construction ofthe thermoelectric power plants Maranhão IV and V, this bridge financing incurs annual interest ofthe CDI rate + 3% and matures initially on June 26, 2013, whereupon the principal and interest isdue. A further R$ 75 million was disbursed on February 28, 2012 by the bank on the same terms asthe previous disbursement. R$ 90 million of the principal plus the interest due was settled onDecember 28, 2012, when the long-term BNDES financing described in items (j) and (k) wasreleased. On June 26, 2013 the Company renegotiated the principal balance of R$ 60 million, payingall the interest due up to that date with the new maturity date changing to September 24, 2013 andthe interest held at the CDI rate plus 3% per annum. On September 24 UTE Parnaíba renegotiatedthe terms of the contract, changing the maturity date to October 24, 2013 and subsequently toNovember 24, 2013. On October 31, 2013 a new renegotiation amended the loan's maturity toDecember 18, 2014. The principal and interest will be paid in 15 monthly installments. The balanceof the principal at December 31, 2013 stands at R$ 48 million.
(i) On December 27, 2011 Parnaíba I borrowed R$ 125 million under a CCB loan (Bank Credit Note)with Banco Itaú BBA, which was guaranteed by the parent company. Taken out to finance theconstruction of the thermoelectric power plants Maranhão IV and V, this bridge financing incursannual interest of the CDI rate + 3% and matured originally on June 26, 2013, whereupon theprincipal and interest was due. R$ 60 million of the principal plus the interest due was settled inDecember 2012, when the long-term BNDES financing described in items (j) and (k) was released.On June 26, 2013 the company renegotiated the principal balance of R$ 65 million, paying all theinterest due up to that date with the new maturity date changing to September 24, 2013 and theinterest held at the CDI rate plus 3% per annum. On this date a new renewal amended thefinancing's maturity to October 24, 2013 and subsequently to April 15, 2015. The principal andinterest will be paid in 5 quarterly installments commencing April 15, 2014. The balance of theprincipal at December 31, 2013 stands at R$ 60.7 million.
(j) In December 2012 Parnaíba I received R$ 495.7 million as subcredits B and C of the bridge financingfrom BNDES, out of a total of R$ 671 million. These subcredits will be amortized over 168 monthlyinstalments commencing July 15, 2013, along with the interest. The financing incurs LTIR + 1.88%p.a. The balance of the principal at December 31, 2013 stands at R$ 493.4 million.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
63 of 98
(k) In December 2012 Parnaíba I also received R$ 204.3 million referring to the entire subcredit A of thelong-term financing contract with the BNDES mentioned in the item above. This subcredit will beamortized over 13 annual instalments commencing July 15, 2014, along with the interest. Thefinancing incurs IPCA + BNDES Reference rate + 1.88% p.a. The interest earned during the graceperiod was capitalized along with the amounts paid out. The balance of the principal at December 31,2013 stood at R$ 215.9 million. This financing is secured by the traditional guarantee for projectfinance.
UTE Parnaíba II Geração de Energia SA (Parnaíba II)
(l) On March 30, 2012 the Parnaíba II project secured R$ 100 million via a CCB financing from BancoItaú BBA, guaranteed by the parent company. Originally maturing on September 30, 2013 for thepayment of principal and interest, this bridge financing was used to finance the building of theMaranhão III thermal power plant. Upon maturity this bridge financing incurs annual interest of theCDI rate + 3% and matured on September 30, 2013, whereupon the principal and interest was due.The Company renegotiated the financing, altering its maturity date to December 30, 2013. Thefinancing was subsequently renegotiated, changing its maturity to December 30, 2014 and anadditional R$ 100 million was borrowed, maturing on December 30, 2014.The balance of theprincipal at December 31, 2013 stands at R$ 200 million.
(m) On March 30, 2012 UTE Parnaíba II Geração de Energia S.A. borrowed R$ 125 million under a CCBfinancing (Bank Credit Note) with Banco HSBC, which was guaranteed by the parent company.Taken out to finance the construction of the thermoelectric power plant Maranhão III, this bridgefinancing incurs annual interest of the CDI rate + 3% and matured on September 30, 2013,whereupon the principal and interest was due. On September 30, 2013 UTE Parnaíba II renegotiatedthe agreement, altering its maturity date to December 30, 2013. A further R$ 100 million wasdisbursed on June 3, 2013 by the bank on the same terms as the previous disbursement, althoughthe principal and interest of this financing mature on December 31, 2013. The principal of R$ 225million was settled in December 2013 along with the interest incurred.
(n) In May 2012 Parnaíba II borrowed R$ 325 million under a CCB financing from Caixa EconômicaFederal, which was guaranteed by the parent company. Taken out to finance the construction of thethermoelectric power plant Maranhão III, this bridge financing incurs annual interest of the CDI rate+ 3% and originally matured on November 7, 2013, whereupon the principal and interest was due. Aportion of R$ 125 million has been released, in addition to two portions of R$ 100 million, on May 8,2012, May 15, 2012 and May 30, 2012. Upon maturity the company renegotiated the financing,altering its maturity date to December 30, 2013. R$ 45 million of the principal has been repaid todate, in addition to the interest incurred, and the remaining amount has been renegotiated toDecember 30, 2014. The balance of the principal at December 31, 2013 stands at R$ 280.0 million.
(o) Parnaíba II received a bridge financing from BNDES of R$ 280.7 million at the end of December2013. This financing will be amortized in a single payment on June 15, 2015 along with the interest.The annual costs is LTIR + 2.40%.
Eneva S.A. (Eneva)
(p) On December 16, 2013 Eneva renegotiated the R$ 105.8 million of CCBs (Bank Credit Notes) fromBanco Itaú BBA S.A., paying all the interest due up to that date with the new maturity date changingto December 16, 2014. The cost will be CDI plus 2.65% per annum with the interest and principalbeing paid at the end of the operation.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
64 of 98
(q) On July 18, 2012 Eneva S/A publicly distributed 300 commercial promissory notes in a single series,with a nominal unit value of R$ 1 million, amounting to a total of R$ 300 million, maturing 360 daysafter issuance, yielding the CDI rate plus 1.5% p.a. These promissory notes were settled in advance intheir entirety on June 28, 2013 via the issuance of new promissory notes described in item (u) below.
(r) On September 27, 2012 the parent company Eneva S.A issued a CCB (Bank Credit Note) via BancoCitibank S.A. for R$ 101,250 maturing on September 27, 2013. The interest agreed was 100% of theCDI rate +1.15% per annum and is due upon maturity, on September 27, 2013. On this date EnevaS/A renewed this agreement, changing its maturity date to September 22, 2014 and changing theinterest rate to CDI plus 2.95% per annum.
(s) On September 27, 2012 Eneva took out financing equal to USD 50,000 from Banco Citibank S.A.under a Credit Agreement, in accordance with BACEN Resolution 4131. This financing is subject tointerest of Libor 3M + 1.26% p.a. and will be paid quarterly. The principal will be paid semi-annually, with a grace period of September 26, 2014 and the contract expiring on September 27,2017. Eneva S.A. took out a swap from Citibank in order to hedge this loan against exchangevariance. The balance of the principal at December 31, 2013 stands at R$ 117 million. See Note 18.
(t) On December 14, 2012 Eneva S.A. publicly distributed 300 commercial promissory notes in a singleseries, with a nominal unit value of R$ 1 million, amounting to a total of R$ 300 million, maturing360 days after issuance, yielding the CDI rate plus 1.5% p.a. These promissory notes were settled onthe due date.
(u) On June 28, 2013 Eneva S/A publicly distributed 33 commercial promissory notes in a single series,with a nominal unit value of R$ 10 million, amounting to a total of R$ 330 million, maturing onDecember 25, 2013, yielding the CDI rate plus 2.95% p.a. These promissory notes were settled on thedue date.
(v) On December 13, 2012 Eneva issued a CCB (Bank Credit Note) via Banco BTG Pactual for R$ 101.9million maturing on December 13, 2013. Upon maturity the line was renegotiated, altering itsmaturity date to December 09, 2014. The interest will be paid quarterly at the cost of the CDI rateplus 3.75% p.a. The principal will be paid in full upon maturity.
(w) On February 7, 2013 Eneva issued a CCB (Bank Credit Note) via Banco BTG Pactual for R$ 350million maturing on August 6, 2013. The interest agreed was 100% of the CDI rate 2.95% per annumand is due upon maturity. On August 6, 2013 the company renegotiated the financing, altering itsmaturity date to December 2, 2013. A new renegotiation extended the debt's maturity date to June 9,2015, with interest paid quarterly at the cost of CDI + 3.75% p.a. and the principal paid on maturity.
(x) On December 9, 2013 and December 26, 2013 Eneva issued two CCBs (Bank Credit Notes) via BancoBTG Pactual for the individual amounts of R$ 100 million on December 9, 2013 and R$ 270 millionon December 26, 2013, both maturing on December 9, 2014. The interest agreed was 100% of theCDI rate plus 3.75% per annum and will be paid quarterly.
(y) On March 25, 2013 Eneva issued a CCB (Bank Credit Note) via Banco HSBC for R$ 100 millionmaturing on March 25, 2014. The interest agreed was 100% of the CDI rate 1.75% per annum and isdue upon maturity. The interest accumulated to December 12, 2013 was paid and a new maturity wasagreed for December 12, 2014. The spread for this new period will be 2.75% per annum. At the timeof the renegotiation the Company issued a new CCB amounting to R$ 203.8 million scheduled formaturity on December 12, 2014. The cost will be the CDI rate plus 2.75% p.a. with interest andprincipal paid on maturity.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
65 of 98
(z) Eneva took out financing from Citibank S.A of R$ 42 million (in the form of a CCB) on November 1,2013, maturing on November 3, 2014. The interest will be paid quarterly at the cost of the CDI rateplus 4.00% p.a. and the principal will be paid upon maturity.
(aa) Eneva issued through Banco Citibank S.A a CCB (Bank Credit Note) for R$ 100 million on December9, 2013 maturing on December 9, 2014, at an interest rate of the CDI rate plus 4.00% p.a. withpayment of the principal and interest upon maturity.
(bb) On December 5, 2013 Eneva issued a Itaú BBA CCB (Bank Credit Note) for R$ 200 million maturingon December 5, 2014. The interest agreed was 100% of the CDI rate plus 2.65% per annum withprincipal and interest due upon maturity.
(cc) On December 9, 2013 Eneva issued a Itaú BBA CCB (Bank Credit Note) for R$ 210 million maturingon December 9, 2014. The interest agreed was 100% of the CDI rate plus 2.65% per annum withprincipal and interest due upon maturity.
(dd) As a result of the negotiations of OGX Maranhão (now Parnaíba Gás Natural), Eneva took outfinancing from Banco Santander of R$ 66.6 million (CCB) on November 4, 2013, maturing onJanuary 15, 2015. The interest will be paid monthly at the cost of CDI plus 3.25% p.a. until June 14,2014, 3.75% p.a. until September 14, 2014 and 4.25% until the full settlement of the CCB. Theprincipal will be paid upon maturity.
(ee) As a result of the negotiations of OGX Maranhão (now Parnaíba Gás Natural), Eneva took outfinancing from Morgan Stanley of R$ 66.6 million (CCB) on November 4, 2013, maturing on January15, 2015. The interest will be paid monthly at the cost of CDI plus 3.25% p.a. until June 14, 2014,3.75% p.a. until September 14, 2014 and 4.25% until the full settlement of the CCB. The principal willbe paid upon maturity.
(ff) As a result of the negotiations of OGX Maranhão (now Parnaíba Gás Natural), Eneva took out a loanfrom Itaú BBA of R$ 66.6 million (CCB) on November 04, 2013, maturing on January 15, 2015. Theinterest will be paid monthly at the cost of CDI plus 3.25% p.a. until June 14, 2014, 3.75% p.a. untilSeptember 14, 2014 and 4.25% until the full settlement of the CCB. The principal will be paid uponmaturity.
Porto do Pecém Geração de Energia SA (Pecém I)
(gg) By June 30, 2013 the BNDES had released R$ 1.40 billion of a long-term loan to Pecém I TheBNDES financing agreement involves a total amount of R$ 1.41 billion (in nominal R$, excludinginterest during the construction), with a total term of 17 years, including 14 years for amortizationand a grace period for payment of interest and principal until July 2012. The financing incurs LTIR +2.77% p.a. The interest was capitalized during the construction phase. The balances of the principaland interest stated in the table above refer to 50% of the original balances, and take into account the50% interest of EDP Energias do Brasil S.A. in the company. This financing is secured by thetraditional guarantee for project finance.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
66 of 98
(hh) To complement the direct financing from the BNDES, Pecém I has a direct financing from theInteramerican Development Bank - BID ("A Loan"), worth a total USD 147 million, of which USD143.78 million has been released thus far (equal to R$ 316,284 at December 31, 2013). The A Loanhas an annual cost of Libor + 3.5% and a total term of 17 years, with 14 years repayment and a graceperiod on the principal until July 2012. The balances of the principal and interest stated in the tableabove refer to 50% of the original balances, and take into account the 50% interest of EDP Energiasdo Brasil S.A.
(ii) To complement the direct financing from the BNDES, Pecém I has an indirect financing from theInteramerican Development Bank - BID ("B Loan"), worth a total USD 180 million, of which USD176 million has been released thus far (equal to R$ 369,012 at December 31, 2013). The onlendingbanks are Grupo Banco Comercial Português, Calyon and Caixa Geral de Depósito. The B Loan has atotal term of 13 years and a cost of 3.0%, with 10 years repayment and a grace period on the principaluntil July 2012. The balances of the principal and interest stated in the table above refer to 50% ofthe original balances, and take into account the 50% interest of EDP Energias do Brasil S.A.
MPX Chile Holding Ltda (MPX Chile)
(jj) On April 13, 2011 MPX Chile took out an offshore borrowing from Banco Credit Suisse, guaranteedby the parent company. The debt is denominated in US dollars amounting to USD 15 million (equalto R$ 21,038 at December 31, 2013), and charged fixed annual interest of Libor + 8.13%. Theprincipal and interest will be paid semi-annually, with a grace period for the principal until April 15,2013 and the contract expiring on April 15, 2015. The balances of principal and interest shown in thetable above account for 50% of the original balances.
(kk) On June 29, 2011 MPX Chile took out an offshore borrowing from Banco Credit Suisse, endorsed bythe parent company. The debt is denominated in US dollars amounting to USD 10 million (equal toR$ 18,495 at September 30, 2013), and charged fixed annual interest of Libor + 8%. The principaland interest will be paid semi-annually, with a grace period for the principal until April 15, 2013 andthe contract expires on April 15, 2015. The balances of principal and interest shown in the tableabove accounts for 50% of the original balances.
UTE Parnaíba IV Geração de Energia SA (Parnaíba IV)
(ll) On April 29, 2013 the Parnaíba IV project borrowed R$ 70 million under a CCB contract (BankCredit Note) with Banco BTG Pactual. Taken out to finance the construction of a natural gas thermalpower plant with Kinross Brasil Mineração S.A., this bridge financing incurs annual interest of theCDI rate plus 2.28% per annum and matures on January 29, 2014, whereupon the principal andinterest are due.
UTE Parnaíba III Geração de Energia SA (Parnaíba III)
(mm) On November 25, 2013 the Parnaíba III project secured a bridge financing from Banco Bradesco ofR$ 120 million, initially maturing on January 9, 2014. A new maturity date was agreed for January31, 2014. The cost of the bridge financing is CDI plus 2.53% per annum. Principal and interest will bepaid at the end of the operation.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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The instalments of the borrowings and financing classified in non-current liabilities at December 31,2013 have the following payment schedule:
ConsolidtedMaturity
2015 1,094,3522016 244,0452017 283,2302018 to final maturity 2,180,751
3,802,378
The Project Finance account with real guarantees of the project include Pledge of Shares,Assignment of Rights and Credits, Emerging Fiduciary Rights Project, Conditional Assignment ofRights and Contracts, Chattel Mortgage of Machinery and Equipment, among others.
Financial covenants
Creditors involved in financial contracts use financial covenants in a number of debt contracts tomonitor the Company and its investees' financial situation.
The financing contracts relating to the ventures Porto do Pecém Geração de Energia S.A., Pecém IIGeração de Energia S.A., Itaqui Geração de Energia S.A. and Parnaíba Geração de Energia S.A. haveminimum debt service coverage indexes that measure the payment capacity of the financial expensein relation to EBITDA. .
All the financial covenants had been complied with at December 31, 2013.
A number of financing contracts also have non-financial covenants, which are usual for the marketand have been summarized below. At December 31, 2013 all these covenants had been compliedwith.
Obligation to periodically submit financial statements to creditors.
Creditor rights to inspect and visit facilities.
Obligation to keep up with tax, social security and payroll obligations.
Obligation to maintain materially important contracts for its operations in force.
Comply with environmental legislation and keep any operating licenses necessary in force.
Contractual restrictions on related-party transactions and sales of assets outside the normalcourse of business.
Restrictions on the change of share control, corporate restructuring and material changes to thecore activities and Articles of Association of the borrowers.
Restrictions on debt ratios and the procurement of new debt.
No non-performance of financial and non-financial covenants were noted at December 31, 2013.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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17 Taxes and contributions payable
Parent company Consolidated
2013 2012 2013 2012(Re-
presented)
Corporate Income Tax - IRPJ 344Social Contribution on Net Income - CSLL 537Income Tax Withheld at Source - IRRF 6 56 6,286 1,667ICMS 1 37 634 115PIS, COFINS, IRRF and CSL 570 40 23,406 1,559Tax on Financial Transactions - IOF 56 14 58 15Others 76 255 15,550 3,004
Current 709 402 45,934 7,241
18 Financial instruments and risk management
The management of these financial instruments is done through operating strategies and internalcontrols, aimed at liquidity, profitability and security. Our control policy consists of permanentlymonitoring contract rates versus market rates. The Company and its subsidiaries do not invest inderivative financial instruments or any other risky assets on a speculative basis. This is adetermination of the financial investment policy.
The estimated realization values of the financial assets and liabilities of the Company and itssubsidiaries were determined through information available in the market and appropriate valuationmethodologies. However, considerable judgment was required in the interpretation of the marketdata to estimate the most adequate realization value. Consequently, the estimates below do notnecessarily indicate the values that could be realized in the current exchange market. The use ofdifferent market methodologies may have a material effect on the estimated realizable values.
The description of the consolidated carrying amounts of financial instruments included in thebalance sheets at December 31, 2013 and 2012, are presented below:
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
69 of 98
Parentcompany
2013 2012
Financial instruments Total Total
Assets
Loans and receivablesAccounts receivable from other related parties 217,337 1,134Accounts receivable from subsidiaries 123,005 16,364Loans to subsidiaries 909,327 505,976Judicial deposits 38 102,684Cash and cash equivalents 110,157 206,263
Fair value through profitGains on derivative transactions 4,171 3,018
Embedded derivatives 479
Liabilities
Other financial liabilitiesTrade payables 3,473 3,849Borrowings and financing 2,217,628 1,026,527Debentures 5,350 5,065
Debts with subsidiaries 4,444 3,859Debts with other related parties 2,664Debts with other related parties 30,045
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
70 of 98
Consolidated
2013 2012Re-
presented
Financial instruments Total Total
Assets
Loans and receivablesAccounts receivable 294,396 21,345CCC subsidy receivable 30,802 42,178Loans to subsidiaries 191,968 134,926Accounts receivable from other related parties 218,680 1,134Accounts receivable from other parent companies 6,793Accounts receivable from subsidiaries 117,372Judicial deposits 118,644 135,683Cash and cash equivalents 277,582 519,277
Fair value through profitSecurities 3,441
Gains on derivative transactions 4,171 3,018
Embedded derivatives 479
Liabilities
Other financial liabilitiesTrade payables 115,261Borrowings and financing 6,210,520 4,924,780Debentures 5,350 5,065Debts with subsidiaries 145,412 27,213Debts with other related parties 162,308 3,989
Fair value through profitLosses on derivative transactions 117,748
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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The financial instruments measured at amortized cost and presented above are close to their marketvalues (fair value).
18.1 Fair value of financial instruments
The concept of fair value states that assets and liabilities should be valued at market prices, in thecase of liquid assets, or by using mathematical pricing methods, in other cases. The hierarchy level ofthe fair value gives priority to unadjusted prices quoted on an active market. A part of the Company'saccounts has the fair value equal to book value, these accounts include cash equivalents, payablesand receivables, bullet debts and short-term. The accounts whose fair value differs from book valueare shown below:
Consolidated
2013
Pricesobservable in
an activemarket
Pricing withobservable
prices
Pricing withoutobservable
prices(Level I) (Level II) (Level III)
Derivatives 4,171
Balance at December 31, 2013 4,171
2012
Pricesobservable in
an activemarket
Pricing withobservable
prices
Pricing withoutobservable
prices(Level I) (Level II) (Level III)
Securities 3,441Derivatives (114,251 )
Balance at December 31, 2013 3,441 (114,251 )
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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Parent company
2013
Pricesobservable in
an activemarket
Pricing withobservable
prices
Pricing withoutobservable
prices(Level I) (Level II) (Level III)
Derivatives 4,171
Balance at December 31, 2013 4,171
2012
Pricesobservable in
an activemarket
Pricing withobservable
prices
Pricing withoutobservable
prices(Level I) (Level II) (Level III)
Derivatives 3,497
Balance at December 31, 2013 3,497
18.2 Derivatives, hedges and risk management
The Company has a formal policy for financial risk management. The use of financial instruments forhedging purposes is done through an analysis of the risk exposure (exchange and interest rates,amongst others) and follows the strategy approved by the Board of Directors.
The protection guidelines are applied according to exposure type. The risk factors posed by foreigncurrencies should be neutralized in the short term (within 1 year), and the protection may beextended for longer. Decision taking regarding the risk posed by interest rates and inflation onliabilities acquired will be assessed in terms of the economic and operational context and whenManagement deems the risk to be material.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
73 of 98
18.2.1 Notional and fair value of derivative instruments
Forward currency contract - acquisition of US dollars (USD)
2013 2012
MaturityNotional
USD Assets Liabilities MTMNotional
USD MTMEneva
Long poitionUSDGoldman Sachs 10,963 735Morgan Stanley 01.04.2014 59,207 4,171 4,171 8,524 1,443
Total USD 59,207 4,171 4,171 19,487 2,178
2013 2012
MaturityNotional
USD MTMNotional
USD MTMEneva
Long position USDGoldman Sachs 10,963 735Morgan Stanley 8,524 1,443
Total USD 19,487 2,178
Interest rate swap obligation
2013 2012
MaturityNotional
USD Assets Liabilities MTMNotional
USD MTMUTE Porto do Itaqui
Libo/fixedCitibank 220,776 (117,748 )
Total Swap 220,776 (117,748 )
Swap cross-currency
2013 2012
MaturityNotional
USD Assets Liabilities MTMNotional
USD MTMEneva
Libor USD | DICitibank 27.09.2017 101,250 117,544 101,894 15,650 101,250 840
Total Swap 101,250 117,544 101,894 15,650 101,250 840
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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18.2.2 Market risk
Risk of change in prices of commodities, exchange rates and interest rates.
18.2.2.1Risk of oscillation in commodity prices
In Eneva's case, this risk is exclusively posed by the coal price, which is recorded, according to theformation of inventory for generating energy in the thermoelectric power plants.
The inventory coal price is established and will be converted into revenue, according to theremuneration for the energy generation, according to the PPA rules1. The period between thepurchase of the cargo and its use for generating energy constitutes the price change risk incurred bythe thermoelectric power plant.
(a) Risk management
The coal price risk is managed by structuring hedge transactions in the future coal market withoutphysical settlement. Eneva is seeking resources in the domestic market - whose market for this typeof operation is still at an initial stage - to mitigate the risk posed by its coal inventory by structuringhedges at the start of 2014. At the end of 2013 the Company did not have any such derivatives.
18.2.2.2 Currency risk
Risk of change in exchange rates which could be associated to the Company's assets and liabilities
(a) Risk management
The Company manages the exchange risk on a consolidated basis for its companies to detect andmitigate risks posed by changes in exchange rates underlying global assets and liabilities. The aim isto detect or create natural hedges, taking advantage of the synergy between the companies'operations, thereby minimizing the use of derivatives. Derivative instruments are used in caseswhere natural hedges cannot be taken advantage of.
(b) Investment in fixed assets (capex)
The revenue of Eneva's consolidated energy generating units is denominated in reais. Part of theinvestment made in fixed assets is also paid in foreign currency, primarily US dollars and euros. Thevolumes and terms of these payments do not generally require the structuring of hedge transactions.The Company is currently mapping out the payments in foreign currencies - based on historic andfuture entries, in order to establish an average amount and terms, thereby ensuring control over therelated foreign currency exposure.
(c) Coal inventory
The Company goes long when forming its coal inventory for its thermal power plants, which in turnis determined in the international market in US dollars. The Company consequently also assumes along position in US dollars, generally creating a mismatch between its assets and liabilities. Asmentioned earlier for the coal price risk, the company is studying hedge mechanisms against themarket risks posed by coal purchases. In other words, the commodity price hedge and the exchangerisk hedge will be structured simultaneously.
1 The Multiyear Plan (PPA) is the planning instrument that establishes the regional guidelines, objectives andtargets of the Public Administration for a period of four years.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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(d) Borrowings and financing
The Company has foreign exchange exposure on its financial liabilities, deriving from transactions inUS dollars by its subsidiaries. Eneva's 50.00 million US dollar financing is translated into reais forrestatement via the DI rate via a cross-currency swap. The result and sensitivity analysis of theoperation are shown below.
Risk for the PositionAmount
Fair
Scenario I(25%
increase)
Scenario II(50%
increase)
Eneva SA
Cross-Currency Swap (hedge) US dollar devaluation 117,544 146,930 176,316US dollar financing US dollar valuation (117,544) (146,930 ) (176,316 )
Net exposure
(*) The valuation does not denote the total exposure in the currency or the overall loss posed bythis exposure.
Reference rate: PTAX 800 Venda (2.3426 on 12/31/2013) of the Brazilian Central Bank.
Scenario I: adverse change of 25% (increase in foreign exchange rate to generate loss in a shortposition)
Scenario II: adverse change of 50% (increase in foreign exchange rate to generate loss in a shortposition)
(e) Operations hedged by derivative instruments
US dollar financing of UTE Porto do Pecém
Hedge accounting
The investment in capex of Energia Pecém (construction of the thermal power plant) will consist of75% long-term financing, partly in US dollars, and 25% of company capital. The long-term financingagreements were signed with the Inter-American Development Bank ("BID") and the National Socialand Economic Development Bank ("BNDES") on July 10, 2009. To finance its capex requirements inthe period prior to July 10, 2009 it was necessary to take out a bridge financing from Citibank, whichwill be repaid using funds provided under these financing agreements.
As most of the investment is denominated in US dollars and Euros and its future revenue will begenerated in Brazilian reais, derivative instruments have been taken out for hedge purposes. OnApril 1, 2009 the Company used hedge accounting in order to hedge against the exchange varianceon the long-term US dollar financing taken out from IDB. The derivative instrument used is an NDFmaturing in October 2012 with a notional value of USD 327 million. (USD 163.5 million equal to 50%of the interest of Eneva S.A.). This NDF was rolled over on September 25, 2012 with a notional valueof USD 327 million and maturing between November 2012 and May 2015.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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As this is hedge accounting classified as cash flow, changes in the fair value of derivative instrumentsdesignated as cash flow hedges are recognized directly in shareholders' equity for the amount of thehedge that is considered effective. The difference between the fair value and the exchange variance isthe ineffective portion which is therefore recognized in the statement of operations.
This bridge financing was settled on October 30, 2009. USD 260 million was released on this dateconsisting of the first part of the long-term funding from BID and the adjustment to present value(AVP) was calculated based on the USD 67 million yet to be disbursed by BID (before this release,the AVP was calculated based on the exposure of USD 169 million relating to the difference in thecontracted derivative of USD 327 million and the bridge financing of USD 158 million). USD 50million was released on August 31, 2010 referring to the second portion of the IDB long-termfinancing, and the AVP accordingly began to be calculated based on the outstanding USD 17 million,not yet disbursed by IDB. USD 9 million was released on February 4, 2011 referring to the thirdportion of the IDB long-term financing, and the AVP accordingly began to be calculated based on theoutstanding USD 7 million, not yet disbursed by IDB.
The impacts of the gains and losses of this hedge accounting transaction in the period were asfollows:
2013
Net incomeShareholders'
equity
Hedge derivativesDerivative gains (losses) (3,465 ) 2,287
2012
Net incomeShareholders'
equity
Hedge derivativesDerivative gains (losses) (3,966 ) 2,617
On April 01, 2011 the Company used hedge accounting in order to hedge against the Libor interestfor the amortization period on the long-term US dollar financing taken out from IDB. The derivativeinstrument designated for this relation is an interest-rate cash-flow float/fixed maturing betweenOctober 2012 and October 2024, whose notional amounts refers to the expected accumulateddisbursement tranches of the long-term interest owed to IDB.
As this is hedge accounting classified as cash flow, changes generated by the MTM (marked-to-market) variance, net of the interest provided for up to the base date, are recognized directly inshareholders' equity in an equity valuation adjustment account. The difference between the fairvalue and the Libor rate is the ineffective portion which is therefore recognized in the statement ofoperations.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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The impacts of the gains and losses of this hedge accounting transaction in the period were asfollows:
2013
Net incomeShareholders'
equity
Hedge derivativesDerivative gains (losses) (13,776 ) 9,092
2012
Net incomeShareholders'
equity
Hedge derivativesDerivative gains (losses) 10, 235 (6,756)
18.2.2.3. Interest rate risk
Risk of shifting of the interest structure that could be associated with the payment flows of the debtprincipal and interest.
(a) Cash flow risk related to floating interest rates
There is a financial risk associated with floating rates that could increase the future value of thefinancial liabilities. The common risk is uncertainty about the interest futures market, which makespayment flows unpredictable. In loss scenarios, the interest forward rises, thereby increasing theliability's value. Alternatively, the Company's liabilities could reduce if the rates fell.
More than 90% of Eneva and its subsidiaries' liabilities are indexed to floating interest in theinterbank deposit segment (DI) and the long-term interest rate of the BNDES (TJLP), and in theinflationary segment with restatement according to the IPCA price index.
The debt that incurs the interbank deposit rate is allocated as short-term. 76.71% of the 2.76 billionreais will be repaid by the end of 2014 and the remainder by the first half of 2015. The volatilityposed by this risk factor is thereby substantially reduced.
The BNDES facilities restated by the IPCA and TJLP price indexes - which also contain a stronginflation component - are part of a special credit segment posing low volatility and therefore a lowprobability of abrupt changes in rates. As this is a specific segment, caution should be exercised inrespect of interference and hypotheses in statistical models in the attempt to map out and makeprojections about this segment in order to quantify the hypothetical related losses. Furthermore, thecompanies' assets consisting of the revenue will also be restated by the same rates, whichsubstantially reduces the mismatch between asset and liability rates.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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Sensitivity to interest rates
On December 31, 2013 the Company's debt and its subsidiaries are substantially linked to changes in theinterest rate of the CDI. Considering the current slanting of the high interest rate, a reasonably possiblechange in interest rates from 10% to 11.5% per year, keeping all other variables constant, would add afinancial expense of R$ 93,157 in 2013. With a stress of 25% and 50%, the interest expense would reachR$ 116,447 and R$ 139,737, respectively.
18.2.3. Credit risk
This arises from the possibility of the Company and its subsidiaries suffering losses due to the default oftheir counterparties or of financial institutions where they have funds or financial investments. This riskfactor could derive from commercial operations and cash management.
To mitigate these risks, the Company and its subsidiaries have a policy of analyzing the financial position oftheir counterparties, as well as constantly monitoring outstanding accounts.
The Company has a Financial Investment Policy, which establishes investment limits for each institutionand considers the credit rating as a reference for limiting the investment amount. The average terms arecontinually assessed, as are the indexes underlying the investments, in order to diversify the portfolio. Themaximum exposure to credit risk is denoted by the balance of short-term investments.
Consolidated
2013 2012(Re-
presented)Positions denoting credit risk
Cash and cash equivalents 277,582 519,277Securities 3,441Trade receivables 294,396 21,345Gains on derivative transactions 4,171 3,018CCC subsidy receivable 30,802 42,178Judicial deposits 118,644 135,683
Consolidated credit accounts 725,862 724,942
The amount of cash and cash equivalents are represented mainly by current account and investmentfund maintained at Itaú SA, prime bank and with respect to accounts receivable, their main exposurecomes from the possibility that the Company may incur losses resulting from the difficulty ofcollecting amounts billed. To reduce this risk and to assist in the management of default risk, theCompany monitors the accounts receivable by performing various collection actions. In addition, theCompany's customers have signed an Agreement for Guarantee of Payment and Faithful Fulfillmentof Obligations.
18.2.4 Liquidity risk
The Company and its subsidiaries monitor their liquidity levels, based on expected cash flows versusthe amount of cash and cash equivalents on hand. Managing the liquidity risk means maintainingcash, sufficient securities and capacity to settle market positions. The amounts recognized atDecember 31, 2013 approach the operations' settlement values, including estimated future interestpayments.(see Note 1).
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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Consolidated
2013
Up to 6months
6 to 12months
1 to 2years
2 to 5years
Over 5years
Total byaccount
LiabilitiesTrade payables 331,216 331,216Related parties 306,545 306,545Borrowings and financing 676,967 2,570,541 1,079,040 1,324,391 2,696,265 8,347,204Contractual retention 84,789 84,789Derivative financial instruments 3,971 2,725 4,694 11,390
Total 1,012,154 2,658,055 1,390,279 1,324,391 2,696,265 9,081,144
Consolidated
2012(Re-presented)
Up to 6months
6 to 12months
1 to 2years
2 to 5years
Over 5years
Total byaccount
LiabilitiesTrade payables 115,261 115,261Related parties 30,772 430 31,202Borrowings and financing 598,139 1,883,891 648,171 1,361,339 3,113,213 7,604,753Debentures 111 4,954 5,065Contractual retention 77,374 77,374Derivative financial instruments 14,793 14,322 29,570 59,920 26,749 145,354
Total 758,965 1,975,698 683,125 1,421,259 3,139,962 7,979,009
19 Provision for contingencies
The Company and its subsidiaries are not party to judicial proceedings, involving labor and taxissues rated as a probable loss, and no provision was therefore made for them.
The Company and its subsidiaries are party to judicial proceedings, involving labor and civil issues tothe estimated amount of R$ 108,773 (R$ 24,280 at December 31, 2012). Their legal advisors rate theproceedings as a possible loss, and management does not believe it is necessary to record a provisionfor them.
Passthrough criteria for energy purchasesin the free market in the event of delayedoperations ("ICB Online")
In 4Q13 Aneel approved the claims presented by Pecém I, Itaqui and Parnaíba III for the retroactiveamendment of the criteria for reimbursing the energy acquisition cost incurred to perform its energytrading agreements until the commencement of the commercial start-up of its plants.
Previously the reimbursement criteria used established that the reimbursement be based on the costbenefit index (ICB) of the plant, i.e. the average cost estimated for the National Integrated System(SIN) at the time of the auction in which the plant sold the energy. The new criteria determines thereimbursement based on the effective online cost of the plant for SIN (ICB Online), if it wereavailable. The decision was backdated to the start of the CCEAR dates.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
80 of 98
Downtime Costs (ADOMP)
On January 7, 2014 Pecém I and Itaqui filed legal proceedings against Aneel contesting thecalculation of downtime, as the CCEARs stipulate the use of a mobile average of 60 months ofeffective uptime.
On January 24, 2014 the 15th Federal Court of the Federal District awarded an injunction to thePecém I and Itaqui plants suspending the payment for downtime, based on the time calculated, withimmediate effect. As the amounts owed are usually paid two months later, the payments forDecember 2013 have not been made yet.
The legal proceeding against Aneel is also claiming reimbursement of the amounts paid since thecommencement of the CCEARs.
20 Shareholders' equity
At December 31, 2013 and 2012 respectively, the Company's share capital consists of 702,524,469(seven hundred and two million five hundred and twenty-four thousand, four hundred and sixty-nine) and 578,479,962 (five hundred and seventy-eight million four hundred and seventy-ninethousand, nine hundred and sixty-two) nominative common shares, with no par value and theauthorized capital is 1.2 billion book-entered common shares with no par value.
At December 31, 2013 the Company's share capital was R$ 4,532,314 (R$ 3,731,734 at December 31,2012), consisting of common shares distributed as follows:
2013 % 2012 %Shareholder
Eike Fuhrken Batista 145,704,988 20.7 289,705,431 50.1Centennial Asset Mining Fund LLC (*) 20,208,840 2.9 20,208,840 3.5Centennial Asset Brazilian Equity Fund LLC (*) 1,822,065 0.3 1,822,065 0.3E.ON 266,269,556 37.9 67,869,516 11.7BNDESPAR 72,650,210 10.3 59,823,537 10.4Others 195,868,810 27.9 138,812,343 24.0
Total 702,524,469 100 578,241,732 100
(*) Controlled by Eike Fuhrken Batista.
The changes in the share capital up to the fourth quarter of 2013 have been summarized below:
DateQuantityof shares
Capital(R$ thousand) Description
December/2012 578,241,732 3,731,734 Opening balanceJanuary/2013 147,480 232 Capital increase - company planFebruary/2013 27,000 95 Capital increase - company planApril/2013 34,500 114 Capital increase - company planMay/2013 29,250 99 Capital increase - company planSeptember/2013 124,031,007 800,000 Capital increaseOctober/2013 13,500 40 Capital increase - company plan
12/31/2013 702,524,469 4,532,314 Closing balance
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
81 of 98
The Company's capital was increased in January 2013 by the Board of Directors' meeting heldJanuary 10, 2013, ratifying the issuance of 147,480 new common shares, with no par value, resultingfrom the exercising of stock options awarded under the Company's stock options program. Thenumber of Company shares accordingly changed to 578,389,212.
The Company's capital was increased in February 2013 by the Board of Directors' meeting heldFebruary 6, 2013, ratifying the issuance of 27,000 new common shares, with no par value, resultingfrom the exercising of stock options awarded under the Company's stock options program. Thenumber of Company shares accordingly changed to 578,416,212.
The Company's capital was increased in April 2013 by the Board of Directors' meeting held April 5,2013, ratifying the issuance of 34,500 new common shares, with no par value, resulting from theexercising of stock options awarded under the Company's stock options program. The number ofCompany shares accordingly changed to 578,450,712.
The Company's capital was increased in May 2013 by the Board of Directors' meeting held May 8,2013, ratifying the issuance of 29,250 new common shares, with no par value, resulting from theexercising of stock options awarded under the Company's stock options program. The number ofCompany shares accordingly changed to 578,479,962.
On September 16, 2013 the Board of Directors' meeting ratified the Company's capital increase, asapproved by the Board of Directors' meeting on July 3, 2013, of R$ 799,999,995.15, within theauthorized capital limit, as a result of the subscription and full payment of the 124,031,007 newcommon registered shares with no par value. The number of Company shares accordingly rose from578,479,962 to 702,510,969.
The Company's capital was increased in October 2013 by the Board of Directors' meeting heldOctober 21, 2013, ratifying the issuance of 13,500 new common shares, with no par value, resultingfrom the exercising of stock options awarded under the Company's stock options program. Thenumber of Company shares accordingly changed to 702,524,469.
21 Earnings per share
Basic and diluted earnings per share
The basic and diluted earnings per share were calculated by dividing the results of the yearattributable to the controlling and non-controlling shareholders of the Company at December 31,2013 and December 31, 2012 and the respective average number of common shares in circulation, asper the table below:
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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2013 2012
Common Total Common Total
Basic and diluted numeratorLoss attributable to controlling
shareholders (942,455 ) (942,455 ) (484,151 ) (484,151 )
Basic and diluted denominatorWeighted share average 640,131,923 640,131,923 506,007,513 506,007,513
Loss per share (R$) - basic (1.47229 ) (1.47229 ) (0.95681 ) (0.95681 )
At December 31, 2013 and 2012 there is no material difference between the loss per basic and dilutedshare.
22 Share-based remuneration plan
The Company's stock options are as follows:
Parent companyand consolidated
2013 2012
Stock options granted - Shareholders' EquityGranted by Company 36,231 25,341Granted by Controlling shareholder 314,283 296,563
Total 350,514 321,904
Parent companyand consolidated
2013 2012
Expenses incurred on share options awarded 28,610 47,279
The stock option plans were released in two different forms: the primary plan, which consists ofawarding call options, resulting in the issuance of new shares by the Company or the assignment oftreasury stock; and secondary plans consisting of options offered by the shareholder to Companyexecutives, which in this case does not entail a dilution of the share capital.
(a) Stock options granted by the Company
The Company awarded stock option plans for its own stock to beneficiaries providing services to it.
The Extraordinary General Meeting held November 26, 2007 approved the Stock Purchase OptionProgram, which was recorded in the minutes as an appendix on the same date share options wereawarded to the Company's executives.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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The plan entailed the right to acquire 175,900 shares, following the share split on July 17, 2009,awarded to 5 participants in equal amounts, subject to the individuals remaining with the Companyfor 5 years in order to exercise all of their rights.
The Options Program consists of the right to acquire a certain amount of Company shares, awardedto the program's beneficiary, at a given strike price per share - or purchase price per share - whichhas to be exercised in a period or by a deadline.
The plan's regulations state that the Company's Board of Directors should determine the amount ofshares to be awarded, the strike prices, maturity terms and expiry dates of the rights.
On the date the right is exercised, the shares sold to the plan beneficiary should be the object of anew subscription or were in treasury. The Company's other shareholders do not have subscriptionrights to the shares allocated to the option plans.
The Extraordinary General Meeting held December 7, 2007 approved the grouping of the Company'sshares, by which 22 shares were grouped into 1 common share. The Extraordinary General Meetingheld July 17, 2009 subsequently approved the splitting of the Company shares, by which eachcommon share on that date was split into 20 common shares. A further split was approved onAugust 15, 2012, whereby each common share was split into 3 common shares. These events led toan adjustment in the quantity and strike price of the options under the plans awarded.
The minutes from the Extraordinary General Meeting held September 28, 2010 documented theextension to the Company's stock options program to December 31, 2015.
Options were again awarded to executives on December 1, 2010, subject to the individuals remainingwith the Company for 7 years.
The Extraordinary General Meeting held April 26, 2011 approved the increase to the maximumpercentage of shares that can be allocated to the Stock Options Program, to 2% of the Company'stotal stock.
The EGM held January 26, 2012 updated the Plan's contract and new beneficiaries were included,although for an award date of November 24, 2011.
On May 24, 2012 the split-off was approved to CCX Carvão da Colômbia S.A., which accounted for20.69% of the Company's assets. Following the split-off the share value was reduced by the sameproportion. To maintain the value of the options awarded, a discount was awarded in the strike priceof options not exercised by the date the two companies were split off.
A further 75,000 options were awarded on May 31, 2012. Three more batches were awarded in the3rd quarter of 2012, totaling 165,000 options.
Ten blocks of options had therefore been awarded by December 31, 2013, segregated as follows (*):
Plan 1: 528,000 options awarded on November 26, 2007Plan 2: 3,300,000 options on December 1, 2010Plan 2.1: 30,000 options on April 27, 2012 - the second block of Plan 2Plan 2.2: 60,000 options on June 02, 2012 - the third block of Plan 2
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
84 of 98
Plan 3: 2,098,500 options on November 24, 2011Plan 3.1: 225,000 options on May 31, 2012 - the second block of Plan 3.Plan 3.2: 52,500 options on July 10, 2012 - the third block of Plan 3.Plan 3.3: 22,500 options on July 20, 2012 - the fourth block of Plan 3.Plan 3.4: 90,000 options on August 01, 2012 - fifth block of Plan 3.Plan 3.5: 3,000,000 options on December 13, 2012 - the sixth block of Plan 3
(*) amounts and strike prices after the split on August 15, 2012 and split-off of CCX.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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The table below shows the general terms of the options awarded by the Company.
PlanDate
awarded
Vestingperiod
(years)Initial dateof maturity
Daterightsexpire
Originalamount
awarded (a)
Originalstrike
price (a)
Strike pricerestated by
IPCA
Plan 1 11.26.2007 5 11.26.2008 11.26.2013 528,000 0.76Plan 2 12.1.2010 7 12.14.2011 12.14.2018 3,300,000 2.97 3.78Plan 2.1 4.27.2011 7 4.27.2013 04.07.2020 30,000 4.13Plan 2.2 6.2.2012 7 6.2.2013 06.02.2020 60,000 2.97Plan 3 11.24.2011 7 11.24.2012 11.24.2019 2,098,500 5.14 5.80Plan 3.1 5.31.2012 7 5.31.2013 05.31.2020 225,000 5.14 5.64Plan 3.2 7.10.2012 7 7.10.2013 07.10.2020 52,500 3.91 4.29Plan 3.3 7.20.2012 7 7.20.2013 07.20.2020 22,500 4.13 4.53Plan 3.4 8.1.2012 7 8.1.2013 08.01.2020 90,000 4.23 4.62Plan 3.5 12.13.2012 7 12.13.2013 12.13.2020 3,000,000 4.53 4.80
9,406,500
(a) Amounts and strike prices after the split on August 15, 2012 and split-off of CCX.
The table below shows the changes in the plan of options in 2013.
Plan awarded by the Company -number of stock options Plan 1 Plan 2 Plan 2.1 Plan 2.2 Plan 3 Plan 3.1 Plan 3.2 Plan 3.3 Plan 3.4 Plan 3.5
Balance at December 31, 2012 84,480 2,889,000 27,000 60,000 2,083,500 225,000 52,500 22,500 90,000 3,000,000Exercised (84,480 ) (94,500 ) (3,000 ) (56,250 )Cancelled (805,500 ) (24,000 ) (54,000 ) (360,000 ) (30,000 ) (100,000 )AwardedExpired (213,000) (6,000 ) (147,150 )
Balance at December 31, 2013 1,776,000 1,520,100 225,000 52,500 22,500 60,000 2,900,000
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
86 of 98
To determine the fair value of the options the Merton model (1973)1 was used, which is a variant ofthe Black & Scholes (1973)2 model which considers dividend payments. A number of assumptionswere made for the model's entry variables. Such as:
the share price at the measurement date; the instrument's strike price; the expected volatility; expected dividends; the instruments' term; and risk-free interest rate.
To calculate the expected volatility the continuous returns from the price history of the share wereused (based on the past volatility, adjusted for changes expected due to information publiclyavailable). The time window for estimating the expected volatility was the same as the option's term,or the longest term available, when the trading history of the company's share was shorter than theexpected term.
The risk-free interest rate was based on public securities and interest rate curves published byBM&FBovespa.
Service conditions and performance conditions outside the market inherent to the transactions arenot taken into account when determining fair value.
1 MERTON, R. Theory of Rational Option Pricing. Bell Journal of Economics and Management Science, 4(Spring 1973), 141-832 BLACK, F.; SCHOLES, M. The pricing of options and corporate liabilities. Journal of Political Economy,Chicago, v. 81, p. 637-654, 1973
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
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The table below shows the assumptions made to calculate the fair value of the options awarded by the Company:
Fair value assumptions Plan 2 Plan 2.1 Plan 2.2 Plan 3 Plan 3.1 Plan 3.2 Plan 3.3 Plan 3.4 Plan 3.5
Number of exercisable options (matured) 222,000 168,900 22,500 5,250 2,250 6,000 290,000Average outstanding term (years) 3.38 3.95 4.07 4.18 4.21 4.24 4.62Fair value of options awarded in R$ (a) 0.81 0.57 0.63 0.86 0.82 0.80 0.83Price of the share in R$ (b) 3.00 3.00 3.00 3.00 3.00 3.00 3.00Strike price of the options in R$ (c) 3.78 5.80 5.64 4.29 4.53 4.62 4.80Average expected volatility (per annum) (d) 0.47 0.47 0.49 0.49 0.49 0.49 0.47Risk-free interest rate (per annum) (e) 5.47% 5.77% 5.83% 5.74% 5.76% 5.79% 5.86%Effects on net income in 2013 in R$ k 2,999 34 93 3,505 405 87 40 163 6,953Intrinsic value in R$ k (f)
(a) Calculation of the options' fair value based on the Merton model (1973)(b) The closing price of the share ENEV3(c) Strike prices of the options restated by the IPCA price index.(d) To calculate the volatility of the share the continuous returns from the price history of the share ENEV3 were used.(e) Reference rate to adjust the SWAP contracts for the IPCA coupon disclosed by BM&FBOVESPA.(f) A value of zero is used when the options' intrinsic value is negative.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
88 of 98
(b) Stock options granted by the Shareholder
The Plans awarded by the shareholder include call options granted to executives of the Company.This plan is a means of remunerating and retaining managers and executives who the shareholderviews as key players in the Company's success. These options do not generate any dilution for theother shareholders.
There is no preapproved schedule for this plan, unlike the Company's plan. The shareholder awardedthe plan to employees based on individually negotiated contracts.
As is the case in the plan awarded by the Company, in order to receive each batch, employees mustremain with the Company until the respective maturity date.
The table below shows the overall characteristics of the plan awarded by the shareholder.
PlanDate
awarded
Vestingperiod(years)
Initial dateof maturity
Daterightsexpire
Originalamount
awardedOriginal
strike price
Shareholder 4.28.2008 5 12.13.2008 12.13.2013 3,354,120 0.01Shareholder 4.28.2008 10 12.13.2008 12.13.2018 20,198,040 0.01
23,552,160
The table below consolidates the change in stock options in 2013:
Plan awarded by the Shareholder -number of stock options
Shareholderplan
Balance at December 31, 2012 13,460,472Exercised (403,552 )Cancelled (8,810,460 )AwardedExpired (1,341,648 )
Balance at December 31, 2013 2,904,812
The table below shows the assumptions made to calculate the fair value of the options awarded bythe Shareholder:
Fair Value AssumptionsShareholder
plan
Number of exercisable options (matured) 322,652Average outstanding term (years) 2.99Fair value of options awarded in R$ (a) 2.92Price of the share in R$ (b) 3.00Exercise price of the options in R$ 0.01Average expected volatility (per annum) (c) 47.62%Risk-free interest rate (per annum) (d) 11.96%Effects on net income in 2013 in R$ k 17,721Intrinsic value R$ k 8,685
(a) Calculation of the options' fair value based on the Merton model (1973).
(b) The closing price of the share ENEV3.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
89 of 98
(c) To calculate the volatility of the share the continuous returns from the price history of the shareENEV3 were used.
(d) Reference rate to adjust the SWAP contracts for a fixed rate disclosed by BM&FBOVESPA.
23 Operating revenue
The reconciliation between the gross revenue and the net revenue recorded in the income statementfor the year is as follows:
Consolidated
2013 2012(Re-presented)
Gross revenue 1,600,282 54,179LessSales taxes (161,452) (5,394 )
Total net revenue 1,438,831 48,786
The increase above was due to the commercial start-up of the plants Itaqui, Pecém II and Parnaíbaduring 2013.
24 Costs and expenses by nature
Parent Company Consolidated
2013 2012 2013 2012(Repre-sented)
Depreciation and amortization (2,280 ) (1,535 ) (146,539 ) (8,811 )Personnel expenses (38,968 ) (31,068 ) (91,943 ) (68,155 )Outsourced services (40,401 ) (59,984 ) (161,595 ) (100,279 )Rental expenses (5,533 ) (8,061 ) (172,152 ) (13,046 )Expenses incurred on stock options awarded (28,610 ) (47,279 ) (28,610 ) (47,279 )Provision for Investment Devaluation 3 ) 2 (23 ) (1,237 )Provision for Unsecured Liabilities (8,272 ) (14,363 ) (7,716 ) (14,671 )Cost per Downtime Incident (149,367 )Material (14,705 ) (1,103 )Insurance (17,138 ) (196 )Other expenses (14,042 ) (6,420 ) (93,975 ) (12,187 )Consumables (624,050 ) (67,885)CCC Incentive 69,182 58,936Electricity for resale (274,361 ) (21,640 )
(138,103 ) (168,707 ) (1,712,991 ) (297,553 )
Classified as:Cost (1,507,046 ) (50,949 )Administrative and general expenses and
stock options granted (138,103 (168,707 ) (205,945 ) (246,604 )
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
90 of 98
The increase seen above was due to the commercial start-up of the Itaqui, Pecém II and Parnaíbaplants in the course of 2013.
25 Financial result
The Company's financial result is as follows:
Parent Company Consolidated
2013 2012 2013 2012(Repre-sented)
Financial costsBank expenses (147,857 ) (46,230 ) (364,832) (47,248 )Monetary variance (27,625 ) (4,156 ) (33,745) (16,479 )Loss on derivative transactions (6,142) (1,561 ) (3,339 ) 398,638Debenture interest/cost (786 ) (130,864 ) (786 ) (130,863 )Fair value of debentures (479 ) (479 )Financial advisory services (68,814 ) (68,814 )Other (82,372) (22,127 ) (123,092 ) (44,685 )
(334,075) (204,938 ) (595,087 ) 159,363
Financial incomeShort-term investments 94,632 65,324 63,707 76,599Monetary variance 12,528 3,205 15,346 25,086Gains (losses) on derivative transactions 2,728 5,592 2,728 (422,684 )Fair value of debentures 62,482 62,482Other 3,414 6,240 7,210 8,695
113,302 142,843 88,991 (249,822 )
Net financial result (220,773 ) (62,095 ) (506,096 ) (90,459 )
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
91 of 98
26 Commitments
The main commitments undertaken with suppliers of goods and services are the following:
Contractbalance
Company Supplier Subject matter of contract Signature Term
Totalcontracted
2013
Balance ofcontract
2013 2012
PECÉM II CMC COAL MARKETING Supply of coal 5.25.2012 7.1.2013 17,284PECÉM II BANCO BANKPAR SA Supply of accommodation 12.11.2012 12.10.2014 1,360 853 1,360PECÉM II BRASLIMP TRANSPORTES ESPECIALIZADOS LTDA Transportation and disposal of Class II fluid waste (lime water) and Class II in general 11.5.2013 5.4.2014 882 882PECÉM II CAL TREVO INDUSTRIAL LTDA Supply of Burnt Lime 5.2.2013 5.1.2015 1,119 1,119PECÉM II CARBOMIL QUIMICA S.A Supply of Burnt Lime 7.29.2013 5.6.2015 6,000 5,249PECÉM II CEARA CEARAPORTOS Regulation of the movement of solid bulk at the Pecém Port Terminal 6.29.2012 1.1.2025 1,542 763 1,358PECÉM II CEARA CEARAPORTOS Supply of energy at the Port 8.7.2012 Not determined 2,400 1,658 2,128PECÉM II E ON GLOBAL COMMODITIES SE Supply of coal 10.2.2013 1.9.2014 26,700 9,255PECÉM II EBM CONSULTORIA E INVESTIMENTOS LTDA Technical consultancy for obtaining long-term financing from the Banco do Nordeste do Brasil S.A.
(BNB).1.29.2010 Not determined 4,428 1,757 1,880
PECÉM II ELETROMECANICA CAPISTRANO EIRELI-ME Services for supporting the commissioning and maintenance of turbine 3 9.18.2013 1.31.2014 3,300 854PECÉM II FORNECEDORA MAQUINAS E EQUIPAMENTOS LTDA Provision for Coal Spreading, Stacking and Compacting of Coal in the Yard 8.7.2012 2.15.2014 2,251 732 1,629PECÉM II FORSHIP ENGENHARIA S/A Technical commissioning services at the Pecém II thermal power plant 1.2.2013 1.21.2014 7,037 1,596PECÉM II FRESHFIELDS BRUCKHAUS DERINGER LLP Legal Advisory and Consultancy Services 11.7.2012 12.31.2013 734 584 584PECÉM II GTEL GRUPO TECNICO DE ELETROMECANICA LTDA Assembly services of electric and instrument systems 7.26.2012 12.31.2013 8,284 2,483PECÉM II GTEL GRUPO TECNICO DE ELETROMECANICA LTDA Material and Services for Construction of Ute Pecém II 9.10.2012 3.31.2013 5,287PECÉM II ICAL INDUSTRIA DE CALCINAÇÃO LTDA Supply of Burnt Lime 8.9.2013 4.22.2015 786 786PECÉM II INTEROCEAN COAL SALES LDC Supply of coal 5.25.2012 9.30.2013 16,786 16,786 16,786PECÉM II INTEGRAL ENGENHARIA Supply of Transmission Line 12.12.2011 6.30.2013 1,885PECÉM II MEF PLANEJAMENTO E INFORMATICA LTDA Start-up and commissioning planning services, maintenance services and preparation of boiler
maintenance plans10.16.2012 12.20.2013 9,158 558 1,466
PECÉM II MPX COMERCIALIZADORA DE COMBUSTIVEIS LTDA Business Intermediation, Consultancy and Advisory Services for the Acquisition of Imported Coal. 9.5.2012 10.19.2013 2,000 1,486 1,738PECÉM II MINERAÇÃO BELOCAL LTDA Supply of Burnt Lime 9.3.2013 5.1.2015 941 941PECÉM II MINERAÇÃO LAPA VERMELHA LTDA Supply of Burnt Lime 9.9.2013 2.28.2015 871 871PECÉM II NATIONAL ELECTRIC SYSTEM OPERATOR - ONS Transmission services between concession operators and Mpx 2.8.2013 Not determined 25,601 10,589PECÉM II PORTO DO PECEM TRANSPORTADORA DE MINERIOS S/A Product unloading services for ships moored at the terminal and shipment to the point of delivery 3.26.2012 12.31.2016 6,950 5,632 6,497PECÉM II REX EMPREENDIMENTOS IMOBILIARIOS LTDA Property rental 12.28.2009 11.27.2042 45,283 39,592 41,072PECÉM II RH CLEAN SERVICOS PROFISSIONAIS DE LIMPEZA LTDA Cleaning Services of the Coal Transfer Towers 1.8.2013 12.31.2014 1,263 1,102PECÉM II RIP SERVIÇOS INDUSTRIAIS LTDA Specialist Labor Services 9.24.2013 12.31.2013 7,500 4,163PECÉM II SEMACE Environmental Compensation** 9.5.2008 Not determined 4,850 1,500 1,859PECÉM II SUPRICEL LOGISTICA LTDA Burnt Lime Shipping Services 8.9.2013 4.22.2015 6,112 4,826ITAQUI MABE Construction of UTE-EPC 1.27.2008 Indefinite 144,144 2,738 144,144ITAQUI Tecnometal Supply of coal conveyor transportation system 7.24.2009 Indefinite 121,315 27,926 29,227ITAQUI Cargotec Supply of ship unloading equipment 10.7.2009 7.6.2013 20,161 20,161 15,845ITAQUI Carbomil Supply of Burnt Lime 5.7.2010 7.6.2015 30,000 26,798 29,257ITAQUI RIP Serviços Industriais Services assembling the thermal insulation of the boiler, FGD, Turbine and BOP of the UTE 6.19.2012 1.30.2013 22,300 6,659 6,659ITAQUI EMS Silvestrini Maintenance, Industrial Cleaning and Industrial Support 5.1.2012 6.30.2014 13,342 2,641 8,427ITAQUI Terra Plan Com.e Serviços Coal stacking service during unloading and technical support for fuel and waste areas 9.2.2013 12.31.2013 2,845 1,769ITAQUI Nova Aliança Locação de Veículos Personnel Transportation Services 7.1.2012 8.31.2015 3,843 1,255 2,763ITAQUI E ON GLOBAL COMMODITIES Supply of coal 1.1.2013 3.31.2014 83,700 52,316ITAQUI RH Global Specialist outsourced labor services 7.21.2013 7.21.2014 997 520ITAQUI OGMO Collective agreement with trade unions of dockers, weight master and porters 10.1.2013 9.30.2015 750 750ITAQUI MONSERTEC Procurement of services for the assembly of scaffolding, installation, paintwork and industrial and civil
treatment.12.5.2013 12.4.2015 6,000 6,000
PecémI Mabe Construction of UTE-EPC* 1.27.2008 Indefinite 2,633,962 52,722 104,527PecémI Mabe/SEMACE Environmental compensation* 09.05.2008 Indefinite 713 713 3,584PecémI Consulgal Portugal Owner's engineering* 12.20.2007 2.20.2013 14,004 746 1,741PecémI Other Misc. Services* Other Indefinite 431,788 149,240 155,594PecémI Other Operating Leasing* Other Indefinite 13,901 11,030 11,026PecémI Carbomil Supply of Lime* 6.2.2010 6.2.2015 11,910 9,369 11,372PecémI ICAL Supply of Lime* 9.23.2011 8.23.2013 21,950 21,897 21,950
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
92 of 98
Contractbalance
Company Supplier Subject matter of contract Signature Term
Totalcontracted
2013
Balance ofcontract
2013 2012
PecémI Cogerh Supply of Unprocessed Water* 10.28.2010 4.30.2019 87,120 73,449 75,025PecémI Estre Ambiental Solid Waste* 6.21.2011 5.21.2026 66,764 66,764 66,562PecémI CAGECE Effluent* 11.10.2011 10.10.2031 161,857 155,243 49,708PecémI EDP Comercializadora Energy for sale* Other Indefinite 146,230 87,021PecémI MPX Comercializadora Energy for sale* Other Indefinite 21,201 21,201PecémI BTG Energia Energy for sale* Other Indefinite 44,865 44,865PecémI Other Supply of Coal* Other Indefinite 177,906 121,021UTE Parnaíba II INITEC Energia S.A. Acquisition of 2 (two) turbo generators 8.20.2012 12.19.2013 67,861 61,424UTE Parnaíba II INITEC Energia S.A. EPC 8.15.2011 2.2.2014 913,300 539,425 326,571UTE Parnaíba II Desga Ambiental Industria e Comércio Water intake and disposal system 8.1.2012 10.31.2013 20,763 9,789 16,988UTE Parnaíba II Desga Ambiental Industria e Comércio Full and complete implementation of the water intake and disposal system 8.1.2012 10.31.2013 42,206 42,206 42,206UTE Parnaíba II CEMAR Electricity Sales to Consumers 9.11.2012 9.10.2013 6,022 1,853UTE Parnaíba II General Electric Company Acquisition of 2 (two) turbo generators 8.20.2012 12.19.2013 61,424 9,920 9,920UTE Parnaíba II Hidroinga Artesian Wells Planning and construction of two deep cased wells 11.30.2012 9.29.2013 3,676 509UTE Parnaíba II CONEL CONSTRUCOES E ENGENHARIA LTDA Construction of the well interconnection system 3.21.2013 2.22.2014 11,035 3,736UTE Parnaíba II ARM CONSULTORIA EM SEGURANCA LTDA - PREVINE Consultancy for occupational safety and the environment in audits of companies working on the
construction of UTE Parnaíba II5.21.2013 5.20.2014 4,568 1,851
UTE Parnaíba II RH GLOBAL Procurement of specialist labor 7.24.2013 7.23.2014 1,752 960UTE Parnaíba II LBB TRANSPORTE Extension and completion of effluent disposal ducts in the river alongside the plant 10.15.2013 4.14.2014 1,841 1,300UTE Parnaíba II GUIMAR ENGENHARIA Engineering consultancy 9.1.2013 2.29.2016 3,040 2,512UTE Parnaíba II STEAG ENERGY Engineering consultancy 9.1.2013 2.29.2016 6,504 4,748UTE Parnaíba I GE International GE Turbina e assistencia 5.30.2011 1.18.2014 397,986 334,792 60,594UTE Parnaíba I DURO Felguera EPC 5.30.2011 5.3.2013 468,030 468,030UTE Parnaíba I DURO Felguera EPC and Turbine and technical assistance 5.30.2011 10.31.2013 586,827 290,726 59,014UTE Parnaíba I Guimar Engenharia Engineering consultancy services for UTE Parnaíba. 6.1.2011 10.31.2013 8,335 1,940 643UTE Parnaíba I Biota Projetos e Consultoria Ambiental Biotic Monitoring 8.10.2012 8.9.2018 1,662 1,014 1,556UTE Parnaíba I CONSROD CONSTRUCOES RODOVIARIAS LTDA ME Construction of heliport and new cabin 11.5.2012 6.4.2013 2,194 2,194 2,194UTE Parnaíba I BANCO BANKPAR AS Air tickets, flights and vehicle rental 4.20.2013 4.19.2015 2,718 2,718UTE Parnaíba I BESSA & BARREIRA ADVOGADOS Specialist legal advisory services for environmental matters 1.3.2011 12.31.2013 560 532UTE Parnaíba I GASMAR Distribution system operation and maintenance 12.17.2012 12.16.2027 30,993 2,946UTE Parnaíba I ELETRONORTE Maintenance and operation services - in connection bay 3.21.2013 3.20.2015 1,881 981UTE Parnaíba I EMS SILVESTRINI Preventive, predictive and corrective industrial and electrical and mechanical maintenance of
equipment4.4.2013 4.3.2015 2,662 1,931
UTE Parnaíba I FACULDADES CATOLICAS Design of new business model for trading energy in ACL 2.5.2013 2.4.2015 1,395 610UTE Parnaíba I M CARTAXO LACERDA Procurement of specialist labor 6.3.2013 6.2.2015 1,207 952UTE Parnaíba I OGX MARANHAO Natural gas acquisition 1.1.2013 12.31.2027 371,917 106,968UTE Parnaíba I PETRA ENERGIA Leasing of leased capacity by lessors to lessee 2.1.2013 1.31.2028 434,820 279,059UTE Parnaíba I RH GLOBAL CONSULTORIA E ASSESSORIA LTDA Specialist Services: Outsourced Labor 7.24.2013 7.23.2014 1,076 738UTE Parnaíba I VIP VIGILANCIA Unarmed security and property protection services 8.10.2013 8.9.2015 2,622 2,234UTE Parnaíba I INST. AYRTON SENNA Project implementing management program for correction of school flow and management in municipal
schools of Santo Antônio dos Lopes and surrounding areas6.18.2013 1.30.2017 2,121 2,121
TAUÁ MPX Comerc. de Energia Purchase of energy Other Other 35,201 23,093 21,895Comercializadora Other Electricity sales (***) 9.8.2009 12.31.2013 652,050 56,392 142,378Comercializadora Other Purchase of electricity (***) 9.1.2009 12.31.2013 112,830 19,436 182,854
(*) The figures presented include commitments undertaken by the subsidiary in conjunction with Pecém Geração de Energia S.A, to an amount equal to the Company's percentage interest(50%).
(**) The environmental compensation amounts are being included as and when the construction costs are incurred.
(***) Refers to the purchase and sale of energy from several suppliers and with several clients for the period between 2014 and 2024, subject to fixed prices and volumes. These purchase and saleprices are not therefore subject to changes in the energy sector.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
93 of 98
27 Insurance coverage
It is the policy of the Company and its direct and indirect subsidiaries to take out insurance coveragefor the assets subject to risk at amounts considered by management sufficient to cover any incidents,considering the nature of their activity. The policies are in force and the premiums have been paid.The company considers its insurance coverage is consistent with other companies of similar sizesoperating in the sector.
At December 31, 2013 and 2012, the main risks covered are:
Consolidated
2013 2012
Material damages 12,432,201 7,289,587Civil liability 269,000 567,253
28 Segment reporting
Segment information should be prepared in accordance with CPC 22 (Segment reporting),equivalent of IFRS 8, and should be presented with respect to the Company and its subsidiaries'business that was identified based on its management structure and on internal managementreporting, provided to the main manager for decision-making purposes.
Company Management makes its decisions based on four core business segments: energygeneration, energy sales, supplies and corporate, which are subject to risks and remunerationmanaged by centralized decisions.
The current activity is managed by a main manager, who allocates and evaluates the operationalsegment's performance. In the case of the Company, this manager is the CEO.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
94 of 98
As the ventures move forward, Management aims to re-evaluate business segments to provide themarket with real and quantitative information.
2013
ElectricityGeneration Supplies Corporate Other
Eliminationsand
adjustmentsTotal
consolidated
Balance sheet - assets 8,056,566 5,317 4,751,985 313 (3,149,193 ) 9,689,212
Current 596,950 477 141,242 10 747,842
Cash and cash equivalents 166,960 457 110,156 10 277,583Trade receivables 294,396 294,396SecuritiesInventory 78,376 78,376CCC subsidies receivable 30,802 30,802Gains on derivative transactions 4,171 4,171Secured deposits 38 38Other current assets 26,416 19 26,878 62,477
Non-current 7,459,616 4,840 4,610,742 303 (3,149,193 ) 8,941,310
Long-term
Related parties 24,418 1,249,669 (746,067 ) 528,019CCC subsidy receivable 24,617 24,617Deferred taxes 302,327 302,327Gains on derivative transactionsSecured deposits 118,606 118,606Other non-current assets (15,175 ) 21 214,734 (206,528 ) (6,947 )
Investments 3,130,978 (2,189,125 ) 941,853
Property, plant and equipment 6,805,744 773 12,634 303 6,819,454
Intangible assets 195,653 2,727 213,381
Deferred charges 3,427 4,046 (7,473 )
2013
ElectricityGeneration Supplies Corporate Other
Eliminationsand
adjustmentsTotal
consolidated
Balance sheet - assets 8,065,730 5,317 4,751,987 313 (3,134,135 ) 9,689,212
Current 1,398,839 1,580,010 10 2,978,859
Borrowings and financing 845,930 1,562,211 2,408,142Trade payables 327,743 3,473 1 331,216Losses on derivative transactionsRelated parties (1 )Debentures 112 112Other current liabilities 225,165 14,215 10 239,389
Non-current 4,156,224 22 703,232 501 (723,499 ) 4,136,479
Non-current liabilities
Borrowings and financing 3,146,961 655,417 3,802,378Deferred taxes 9,591 9,591Related parties 995,147 22 34,489 501 (722,438 ) 307,720Debentures 5,239 5,239Losses on derivative transactionsOther non-current liabilities 4,524 8,087 (1,060 ) 11,551
Non-controlling shareholders 123,633 ) 123,633
Shareholders' equity 2,510,668 5,295 2,468,744 (198 ) (2,534,268 ) 2,450,242
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
95 of 98
2013
Electricitygeneration Supplies Corporate Others
Eliminationsand
adjustmentsTotal
consolidated
Statement of operations
Net operating revenue 1,438,831 1,438,831
Cost of Goods and/or services sold (1,506,234 ) (812 ) (1,507,046 )
Operating expenses (43,375 ) (12 ) (123,701 ) (173 ) (167,261 )
Other operating income (24,839 ) (14,403 ) 557 (38,684 )
Equity in net income of subsidiaries (469,179 ) (153,012 )
Financial income (285,315 ) 32 (220,773 ) (40 ) (506,096 )
Provision for current and deferred taxes 103,248 (114,400 ) (11,152 )
Non-controlling interest 1,729 238 1,966
Net income/Loss for the year (315,957 ) (554 ) (942,456 ) (212 ) 557 (942,455 )
2012
Electricitygeneration Supplies Corporate Others
Spin-off /transfers
Eliminationsand
adjustmentsTotal
consolidated
Balance sheet - assets 6,563,847 5,040 3,642,481 (2,171,772 ) 8,039,596
Current 533,146 558 234,244 (2,040 ) 765,908
Cash and cash equivalents 312,468 546 206,263 519,277Trade receivables 21,345 21,345Securities 3,441 3,441Inventory 142,687 142,687CCC subsidies receivable 17,561 17,561Gains on derivative transactions 3,018 3,018Secured deposits 35 35Other current assets 35,644 12 24,928 (2,040 ) 58,544
Non-current 6,030,701 4,482 3,408,237 (2,169,732 ) 7,273,688
Long-termRelated parties 7,463 523,474 (388,085 ) 142,852CCC subsidies receivable 24,617 24,617Deferred taxes 191,148 114,400 305,548Gains on derivative transactionsSecured deposits 32,999 102,649 135,648Other non-current assets 22,070 20 430,344 (407,001 ) 45,433
Investments 2,215,107 (1,381,152 ) 833,955
Property, plant and equipment 5,550,640 416 19,343 5,570,399
Intangible assets 196,846 2,920 15,470 215,236
Deferred charges 4,918 4,046 (8,964 )
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
96 of 98
2012
Electricitygeneration Supplies Corporate Other
Spin-off/transfers
Eliminationsand
adjustmentsTotal
consolidated
Balance sheet - liabilities 6,563,848 5,041 3,642,481 (2,171,774 ) 8,039,596
Current 1,173,710 25 947,342 (11,612 ) 2,109,465
Borrowings and financing 895,622 924,352 1,819,974Trade payables 111,411 1 3,849 115,261Losses on derivative transactions 22,951 22,951Related parties 33,797 24 6,523 (9,572 ) 30,772Debentures 111 111Other current liabilities 109,929 12,507 (2,040 ) 120,396
Non-current 3,482,796 125,547 (379,350 ) 3,228,993
Non-current liabilitiesBorrowings and financing 3,002,631 102,175 3,104,806Deferred taxes 2,048 2,048Related parties 378,945 (378,515 ) 430Debentures 4,954 4,954Losses on derivative transactions 94,797 94,797Other non-current liabilities 4,375 18,418 (835 ) 21,958
Non-controlling shareholders 151,538 151,538
Shareholders' equity 1,907,342 5,016 2,569,592 (1,932,350 ) 2,549,600
2012
Electricitygeneration Supplies Corporate Other
Spin-off/transfers
Eliminationsand
adjustmentsTotal
consolidated
Statement of operations
Net operating revenue 26,686 60,885 89,571
Cost of Goods and/orservices sold (19,294 ) (501 ) (4,040 ) (23,835 )
Operating expenses (33,124 ) (17 ) (109,590 ) (21,297 ) (164,027 )
Other operating income 456 (8,615 ) 64 (8,096 )
Equity in net income ofsubsidiaries (137,806 ) (2,208 ) (140,013 )
Financial income (46,134 ) 19 (54,944 ) 22,333 (78,726 )
Provision for current anddeferred taxes 15,269 11,585 26,853
Non-controlling interest (1,248 ) 150
Net income/Loss for the year (55,390 ) (349 ) (299,371 ) (5,147 ) 60,885 (299,371 )
Geographic data
The four segments described above are located in three different geographical areas, as summarizedbelow:
North and North-east System
The North and North-east System consists of the plants of Itaqui Geração de Energia S.A., Porto doPecém Geração de Energia S.A., Pecém II Geração de Energia S.A., Parnaíba Geração de EnergiaS.A., Parnaíba II Geração de Energia S.A., Parnaíba III Geração de Energia S.A., Parnaíba IVGeração de Energia S.A., Parnaíba V Geração de Energia S.A., Tauá Geração de Energia Ltda., TauáII Geração de Energia Ltda. and Amapari Energia S.A.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
97 of 98
The coal-fired Itaqui thermal power plant is located in the proximity of Itaqui, in the State ofMaranhão. It has an energy generation capacity of 360 MW and has energy sale orders from 2012.
The pulverized coal-fired power plants Porto do Pecém Geração de Energia S.A. and Pecém IIGeração de Energia S.A. are located in the region of Porto do Pecém, State of Ceará, with installedcapacity of 720 MW and 360 MW respectively.
Tauá and Tauá II are also located in the State of Ceará, and are solar energy generation companieswith an environmental license for the joint generation of 5 MW each, where two 1-MW plants havealready been built.
Amapari, an Independent Energy Producer (PIE) in the insulated system, is a diesel fuel thermalpower plant located in the municipality of Serra do Navio, State of Amapá, with an installed capacityof 23 MW.
The Parnaíba complex, a natural gas thermal power plant, is strategically located in block PN-T-68of the Parnaíba Basin, in the State of Maranhão. The venture has been licensed by the MaranhãoState environment Department (SEMA) and has a forecast total capacity of 3,722 MW. The fiveParnaíba companies are located in this complex.
South - Southeast System
The Seival Sul mine, located in the municipality of Candiota, State of Rio Grande do Sul, has provenreserves of 152 million tons of coal. The thermoelectric ventures of Sul Geração de Energia and UTESeival are going to be built in this area. These power plants will have an installed capacity of 727 MWand 600 MW respectively, and will guarantee the supply of fuel for 30 years by integrating with theSeival Sul mine.
29 Subsequent events
On January 24, 2014 the 15th Federal Court of the Federal District awarded an injunction to thePecém I and Itaqui plan suspending the payment for downtime.
Fabio H. Bicudo was elected the new CEO of ENEVA and took office on February 17, 2014.
On February 18, 2014 the Parnaíba III plant was authorized by Aneel to begin the commercialoperation of the second generator plant (7MW), thereby achieving an installed capacity of 176 MW.
A capital increase of R$ 250 million was concluded on February 19, 2014 at Parnaíba Gás NaturalS.A., an associated company ENEVA.
On March 20, 2014 the Company informed the market that the start of the commercial operation ofthe thermal power plant Parnaíba II ("Parnaíba II") would be delayed until the second half of 2014.The Company made a partial hedge of its exposure to the spot market and currently examines allaspects of the project in order to accelerate the implementation schedule of the plant. Additionally,the Geneva Preview seeks regulatory measures that allow mitigating the impacts of delaying the startof the operation of Parnaíba II plant.
In parallel, the Company analyzes alternatives to strengthen its capital structure, potentiallyincluding the sale of assets and / or a capital increase. To date, the Geneva Preview received nobinding offer or signed documents relating to these alternatives, in line with the ongoing processes.
Eneva S.A.(Publicly held company)
Notes to the financial statementsat December 31, 2013In thousands of reais, unless stated otherwise
98 of 98
Board of Directors
Jorgen Kildahl (CEO)Keith Plowman
Stein DaleAdriano Carvalhêdo Castello Branco Gonçalves
Eliezer Batista da SilvaLuiz do Amaral de França Pereira
Ricardo Luiz de Souza RamosLuiz Fernando Vendramini Fleury
Executive Board
Eduardo Karrer (CEO and Investor Relations Officer)Alexandre Americano (Officer)
General Controller's Department Manager
Carlos Renato Rodrigues Peixoto
Accountant
Ana Paula Vergetti DinizCRC 087040/O-9
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FEDERAL PUBLIC SERVICECVM – BRAZILIAN SECURITIES COMMISSIONITR – Quarterly Information Corporate LegislationCOMMERCIAL AND INDUSTRIAL COMPANIES AND OTHER - as of 12/31/2013
02123-7 ENEVA S/A 04.423.567/0001-21
20.01 - OTHER INFORMATION CONSIDERED SIGNIFICANT TO THE COMPANY
Pursuant to the Company's Bylaws, the company, its shareholders and managers undertake to settlethrough arbitration any and all disputes between them arising from, or in connection with, theapplication, validity, effectiveness, interpretation, violation or effects of the rules contained inBrazilian Corporation Law, the Company's By-Laws, regulations issued by the Brazilian MonetaryCouncil, the Brazilian Central Bank and the Brazilian Securities Commission (CVM), and any otherregulations applicable to the capital market in general, as well as those contained in the New MarketRegulations, the Regulations of the Market Chamber of Arbitration and New Market Agreement.
At December 31, 2013 the Company’s share capital consisted of 702,524,469 common sharesdistributed as follows:
CONSOLIDATED POSITION OF CONTROLLING
SHAREHOLDERS, MANAGERS AND FREE FLOAT
Position at 12/31/2013
Number ofCommon Shares
(In Units)
Total Number ofShares
(In Units)% %
Shareholder
Controlling Shareholder 434,005,449 61.78 434,005,449 61.78
ExecutivesBoard of Directors 155,155 0.02 155,155 0.02Executive Board 485,700 0.07 485,700 0.07
Audit Committee* - - - -
Treasury Stock - - - -
Other Shareholders 267,878,165 38.13 267,878,165 38.13
Total 702,524,469 100 702,524,469 100
Free Float 267,878,165 38.13 267,878,165 38.13
*The Company's Annual Meeting did not convene the Audit Committee in FY 2013.
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FEDERAL PUBLIC SERVICECVM – BRAZILIAN SECURITIES COMMISSIONITR – Quarterly Information Corporate LegislationCOMMERCIAL AND INDUSTRIAL COMPANIES AND OTHER - as of 12/31/2013
02123-7 ENEVA S/A 04.423.567/0001-21
20.01 - OTHER INFORMATION CONSIDERED SIGNIFICANT TO THE COMPANY
The Company's capital was increased on 5/26/2011 by the Board of Directors' meeting held3/24/2011, which raised the number of shares from 136,692,680 to 136,720,840, as a result ofsubscription options being exercised.
The Company's capital was increased in February 2012 by the Board of Directors' meeting held2/29/2012, via the issuance of 9,633 new shares resulting from the conversion of 6,383 of the21,735,744 debentures issued by the Company on June 15, 2011. The number of Company sharesaccordingly rose from 136,720,840 to 136,730,473.
The Company's capital was increased in March 2012 by the Board of Directors' meeting held3/21/2012, via the issuance of 984 new shares resulting from the conversion of 649 debentures andthe issuance of 7,040 new common shares, with no par value, resulting from the exercising of stockoptions awarded under the Company's stock options program. The number of Company sharesaccordingly rose from 136,730,473 to 136,738,497.
The Company's capital was increased in May 2012 by the Board of Directors' meeting held 5/9/2012as a result of the (i) issuance of 4,112 new shares resulting from the conversion of 2,701debentures and (ii) the issuance of 125,620 new common shares, with no par value, resulting fromthe exercising of stock options awarded under the Company's stock options program. The numberof Company shares accordingly rose from 136,738,497 to 136,868,229.
The capital was increased again the same month by the Board of Directors' meeting held 5/24/2012,which ratified the issuance of 33,254,705 new common shares with no par value, resulting from theconversion of 21,652,966 debentures. The number of Company shares accordingly rose from136,868,229 to 170,122,934.
On May 24, 2012 the ENEVA Board of Directors approved a capital increase of R$1,000,000,063.00 via the issuance of 22,623,796 new shares. However, the subscribed shares willonly exist after the capital increase has been concluded and subsequently ratified, which wasconcluded in July 2012 and ratified by the Board of Directors' meeting held July 25, 2012.
The Company's capital was increased in June 2012 by the Board of Directors' meeting held6/15/2012, which ratified the issuance of 514 new common shares with no par value, resulting fromthe conversion of 334 debentures. The number of Company shares accordingly rose from170,122,934 to 170,123,448.
On June 25, 2012 the Board of Directors' meeting ratified the capital increase, approved by theBoard of Directors' meeting on May 24, 2012 at 11 AM, of R$ 1,000,000,063.00 (one billion andsixty-three reais), within the authorized capital limit, as a result of the subscription and full paymentof the 22,623,796 new common registered shares with no par value by E.ON AG (“E.ON”). Thenumber of Company shares accordingly rose from 170,123,448 to 192,747,244.
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FEDERAL PUBLIC SERVICECVM – BRAZILIAN SECURITIES COMMISSIONITR – Quarterly Information Corporate LegislationCOMMERCIAL AND INDUSTRIAL COMPANIES AND OTHER - as of 12/31/2013
02123-7 ENEVA S/A 04.423.567/0001-21
20.01 - OTHER INFORMATION CONSIDERED SIGNIFICANT TO THE COMPANY
Pursuant to the minutes of the Extraordinary General Meeting held by the Company on August 15,2012, the shareholders in attendance unanimously approved the split of common shares issued bythe Company, whereby each existing common share was split into 3 (three) shares of the sameclass. ENEVA's shareholders are entitled to receive the split shares according to their shareholdingat Wednesday, August 15, 2012. The number of Company shares accordingly rose from192,747,244 to 578,241,732.
The Company's capital was increased in January 2013 by the Board of Directors' meeting held1/10/2013, ratifying the issuance of 147,480 new common shares, with no par value, resulting fromthe exercising of stock options awarded under the Company's stock options program. The numberof Company shares accordingly changed to 578,389,212.
The Company's capital was increased in February 2013 by the Board of Directors' meeting held2/6/2013, ratifying the issuance of 27,000 new common shares, with no par value, resulting from theexercising of stock options awarded under the Company's stock options program. The number ofCompany shares accordingly changed to 578,416,212.
However, there was a partial subscription of the capital increase, whereby the share capital as ofMarch 31, 2013 stood at R$ 3,736,269,091.89, less than the figure presented in the minutes to theBoard of Directors' meeting held February 06, 2013. The remainder of the share capital was paid inafter the end of the first quarter, resulting in a share capital of R$ 3,736,354,722.02.
The Company's capital was increased in April 2013 by the Board of Directors' meeting held4/5/2013, ratifying the issuance of 34,500 new common shares, with no par value, resulting from theexercising of stock options awarded under the Company's stock options program. The number ofCompany shares accordingly changed to 578,450,712. As a result of this resolution the Company'sshare capital has changed from R$ 3,736,354,722.02 to R$ 3,736,468,820.55.
The Company's capital was increased in May 2013 by the Board of Directors' meeting held5/8/2013, ratifying the issuance of 29,250 new common shares, with no par value, resulting from theexercising of stock options awarded under the Company's stock options program. The number ofCompany shares accordingly changed to 578,479,962. As a result of this resolution the Company'sshare capital has changed from R$ 3,736,468,820.55 to R$ 3,736,568,320.85.
On September 16, 2013 the Board of Directors' meeting ratified the Company's capital increase, asapproved by the Board of Directors' meeting on July 03, 2013, of R$ 799,999,995.15, within theauthorized capital limit, as a result of the subscription and full payment of the 124,031,007 newcommon registered shares with no par value.
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FEDERALPUBLIC
SERVICECVM – BRAZILIAN SECURITIES COMMISSIONITR – Quarterly Information Corporate LegislationCOMMERCIAL AND INDUSTRIAL COMPANIES AND OTHER - as of 12/31/2013
02123-7 ENEVA S/A 04.423.567/0001-21
20.01 - OTHER INFORMATION CONSIDERED SIGNIFICANT TO THE COMPANY
The number of Company shares accordingly rose from 578,479,962 to 702,510,969. TheCompany's share capital has accordingly changed from R$ 3,736,568,320.85 to R$4,536,568,316.00.
The Company's capital was increased in October 2013 by the Board of Directors' meeting held10/21/2013, ratifying the issuance of 13,500 new common shares, with no par value, resulting fromthe exercising of stock options awarded under the Company's stock options program. The numberof Company shares accordingly changed to 702,524,469. As a result of this resolution theCompany's share capital has changed from R$ 4,536,568,316.00 to R$ 4,536,608,413.70.
Shareholdings of over 5% of the shares of each type and class in the Company, including those of
individuals
Position at 12/31/2013Company: ENEVA S.A. (in shares)
Common shares* Total
Shareholder Quantity % Quantity %
Eike Fuhrken Batista 145,704,988 20.7 145,704,988 20.Centennial Asset Mining Fund LLC 20,208,840 2.9 20,208,840 2.9Centennial Asset Brazilian Equity Fund LLC 1,822,065 0.3 1,822,065 0.3E.ON 266,269,556 37.9 266,269,556 37.BNDESPAR 72,650,210 10.3 72,650,210 10.Other 195,868,810 27.9 195,868,810 27.Total 702,524,469 100 702,524,469 100
*ENEVA's share capital consists solely of common shares.
Distribution of share capital in our corporate shareholder (Company shareholder), including the shareholdings ofindividuals
Company: Centennial Asset Mining Fund LLCPosition at12/31/2013(in shares)
Quotas Total
Shareholder Quantity % Quantity %
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Eike Fuhrken Batista 1,000 100.0 1,000 100.0
Total 1,000 100.0 1,000 100.0
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FEDERAL PUBLIC SERVICECVM – BRAZILIAN SECURITIES COMMISSIONITR – Quarterly Information Corporate LegislationCOMMERCIAL AND INDUSTRIAL COMPANIES AND OTHER - as of 12/31/2013
02123-7 ENEVA S/A 04.423.567/0001-21
20.01 - OTHER INFORMATION CONSIDERED SIGNIFICANT TO THE COMPANY
Company: Centennial Asset Brazilian Equity Fund LLCPosition at12/31/2013(in shares)
Quotas Total
Shareholder Quantity % Quantity %
Centennial Asset Mining Fund LLC 1,000 100.0 1,000 100.0Total 1,000 100.0 1,000 100. 0
To facilitate your comprehension a summary follows of the corporate changes ENEVA hasundergone in the period of one year:
On May 27, 2013 E.ON SE. and Mr. Eike Fuhrken Batista ("Parties), the controllingshareholder of ENEVA, signed the Shareholders' Agreement (“Agreement”), bywhich the Parties established the main terms and conditions that will govern theirrelationship as ENEVA shareholders, in order for the Parties to share control of theCompany (subject to the Agreement's severance terms). E.ON and Mr. Eike FuhrkenBatista signed an Investment Agreement on March 27, 2013 for the acquisition by E.ON ofENEVA shares held by Mr. Eike Fuhrken Batista, followed by a private capital increase ofENEVA, ratified on September 16, 2013, as detailed earlier.
At December 31, 2012 the Company’s share capital consisted of 578,241,732 commonshares distributed as follows:
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CONSOLIDATED POSITION OF CONTROLLING
SHAREHOLDERS, MANAGERS AND FREE FLOAT
Position at 12/31/2012
Number ofCommon Shares
(In Units)
Total Amountof shares(In Units)
% %Shareholder
Controlling Shareholder 311,736,336 53.91 311,736,336 53.91
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FEDERAL PUBLIC SERVICECVM – BRAZILIAN SECURITIES COMMISSIONITR – Quarterly Information Corporate LegislationCOMMERCIAL AND INDUSTRIAL COMPANIES AND OTHER - as of 12/31/2013
02123-7 ENEVA S/A 04.423.567/0001-21
20.01 - OTHER INFORMATION CONSIDERED SIGNIFICANT TO THE COMPANY
ExecutivesBoard of Directors 2,303,596 0.40 2,303,596 0.40Executive Board 2,941,360 0.51 2,941,360 0.51
Audit Committee* - - - -
Treasury Stock - - - -
Other Shareholders 261,260,440 45.18 261,260,440 45.18
Total 578,241,732 100 578,241,732 100
Free Float 261,260,440 45.18 261,260,440 45.18
*The Company's Annual Meeting did not convene the Audit Committee in FY 2012.
Shareholdings of over 5% of the shares of each type and class in the Company, including those of
individuals
Position at 12/31/2012Company: ENEVA S.A. (in shares)
Common shares Total
ShareholderQuantity % Quantity %
Eike Fuhrken Batista 289,705,431 50.10 289,705,431 50.10Centennial Asset Mining Fund LLC 20,208,840 3.49 20,208,840 3.49Centennial Asset Brazilian Equity FundLLC
1,822,065 0.32 1,822,065 0.32BNDESPAR 59,823,537 10.35 59,823,537 10.35E.ON 67,869,516 11.74 67,869,516 11.74Other 138,812,343 24.00 138,812,343 24.00Total 578,241,732 100.0 578,241,732 100.0
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FEDERAL PUBLIC SERVICECVM – BRAZILIAN SECURITIES COMMISSIONITR – Quarterly Information Corporate LegislationCOMMERCIAL AND INDUSTRIAL COMPANIES AND OTHER - as of 12/31/2013
02123-7 ENEVA S/A 04.423.567/0001-21
20.01 - OTHER INFORMATION CONSIDERED SIGNIFICANT TO THE COMPANY
Distribution of share capital in our corporate shareholder (Company shareholder), including the shareholdings ofindividuals
Company: Centennial Asset Mining Fund LLCPosition at12/31/2012(in shares)
Quotas Total
Shareholder Quantity % Quantity %
Eike Fuhrken Batista 1,000 100.0 1,000 100.0
Total 1,000 100.0 1,000 100.0
Company: Centennial Asset Brazilian Equity Fund LLCPosition at12/31/2012(in shares)
Quotas Total
Shareholder Quantity % Quantity %
Centennial Asset Mining Fund LLC 1,000 100.0 1,000 100.0
Total 1,000 100.0 1,000 100.0
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Opinions and Representation / Independent Auditors' Report - Unqualified
The Board of Directors and Shareholders of Eneva S.A.
We have examined the financial statements of the company Eneva S.A. (“Company” or "Parent Company"), consisting ofthe balance sheets as of December 31, 2013 and the related statements of income, comprehensive statements of income,the statement of changes in shareholders’ equity and statements of cash flows for the year then ended, in addition to thesummary of the main accounting practices and other notes to the financial statements.
We have also examined the consolidated financial statements of the company Eneva S.A. and its subsidiaries("Consolidated") consisting of the consolidated balance sheets as of December 31, 2013 and the related consolidatedstatements of income, comprehensive statements of income, the statement of changes in shareholders’ equity andstatements of cash flows for the year then ended, in addition to the summary of the main accounting practices and othernotes to the financial statements.
Management's responsibility for the financial statements
Company management is responsible for preparing and adequately presenting these individual financial statements inaccordance with the accounting practices adopted in Brazil and the consolidated financial statements in accordance withInternational Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board – IASB, theaccounting practices adopted in Brazil (BR GAAP), and the internal controls necessary to ensure the financial statementsare prepared free of material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with Brazilian and International Standards on Auditing. The standards require compliance with ethicalstandards by the auditors and that the audit be planned and implemented so as to provide reasonable assurance that thefinancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on our judgment, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error.
When assessing risks auditors take into account the material internal controls used to prepare and adequately present theCompany's financial statements to plan the audit procedures suited to the circumstances, but not for the purpose ofexpressing an opinion about the efficiency of the Company's internal controls. An audit also includes evaluating theadequacy of the accounting practices used and the reasonableness of the accounting estimates made by management, inaddition to evaluating the presentation of the financial statements taken as a whole.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion. Opinion on the individual financial statements
In our opinion, the aforementioned individual financial statements present fairly, in all material respects, the financialposition of Eneva S.A. as of December 31, 2013, and the performance of its operations and cash flows for thefinancial year then ended, in conformity with accounting practices adopted in Brazil.
Opinion on the consolidated financial statements
In our opinion, the aforementioned consolidated financial statements present fairly, in all material respects, the financialposition of Eneva S.A. and its subsidiaries as of December 31, 2013, and the consolidated performance of its operationsand cash flows for the financial year then ended, in accordance with International Financial Reporting Standards(“IFRS”) issued by the International Accounting Standards Board – IASB and accounting practices adopted in Brazil (BRGAAP).
Emphasis
Application of the equity income method and maintenance of deferred charges
As described in Note 3, the individual financial statements were prepared in accordance with accounting practicesadopted in Brazil. In the case of Eneva S.A. these practices only differ from the IFRS applicable to the separatefinancial statements in respect of the evaluation of investments in subsidiaries, associated companies and jointsubsidiaries valued by the equity income method, whereas for the purposes of IFRS this would be at cost or fair value,and the maintenance of the balance of deferred assets existing on December 31, 2008, which are being amortized.Our opinion is not qualified because of this.
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Operational continuity
We draw attention to Note 1 to the financial statements, which states that on December 31, 2013 the Company recordedaccumulated losses of R$ 2,379,303 thousand and its current liabilities exceeded its current assets in the individual andconsolidated financial statements by R$ 1,438,768 thousand and R$ 2,231,017 thousand respectively. Amongst the othersdescribed in Note 1, this situation generates significant uncertainty about its future as a going concern, which will depend onthe success of existing and future operations, in addition to the financial backing of shareholders and/or renegotiating thelength of loans. The financial statements do not include any adjustments to reflect this uncertainty. Our opinion is not qualifiedbecause of this.
Other matters
Financial statements for prior years examined by another independent auditor.
The examination of the financial statements for the financial year ended December 31, 2012, prepared originally beforethe adjustments described in Note 4.5.21, was conducted under the responsibility of other independent auditors, whoissued an unqualified audit report dated May 23, 2013. Under the examination of the 2013 financial statements, we alsoexamined the adjustments described in Note 4.5.21 made to amend the 2012 financial statements presented to facilitatea comparative analysis. In our opinion these adjustments are appropriate and have been correctly made. We were notengaged to audit, review or apply any other procedures to the Company's financial statements for FY 2012 and are nottherefore expressing any opinion or providing any assurance about the 2012 financial statements taken as a whole.
Supplementary information - Statements of added value
We also examined the individual and consolidated statements of added value (DVA) for the financial year ended December31, 2013, which are the responsibility of Company Management, the publication of which is required of publicly heldcompanies by Brazilian corporation law, presented as supplementary information to IFRS which does not require thepublication of DVAs. These statements were subject to the audit procedures described earlier and in our opinion areadequately presented, in all material respects, in relation to the financial statements taken as a whole.
Rio de Janeiro, March 27, 2014
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5 "F"
RJ Guilherme Naves Valle
Accountant CRC 1MG070614/O-5 "S" RJ
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Opinions and Representations / Report of the Audit Committee or Equivalent Body
Not applicable.
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Opinions and Representations / Representation of the Officers about the Financial Statements
In due accordance with the provisions stated in article 25 of Instruction 480/09 issued December 07, 2009, the ExecutiveBoard represents it has reviewed, discussed and accepted the Financial Statements (Parent Company and Consolidated)for the period ended December 31, 2013.
Rio de Janeiro, March 27, 2014.
Eduardo Karrer - CEO and Investor Relations Officer
Alexandre Americano
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Opinions and Representations / Representation of the Officers about the Independent Auditors' Report
In due accordance with the provisions stated in article 25 of Instruction 480/09 issued December 07, 2009, the ExecutiveBoard represents it has reviewed, discussed and accepted the conclusion expressed in the Independent Auditors' reviewreport dated March 27, 2014 on the financial statements (Parent Company and Consolidated) for the financial year endedDecember 31, 2013.
Rio de Janeiro, March 27, 2014.
Eduardo Karrer - CEO and Investor Relations Officer
Alexandre Americano
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Reasons for Re-presentation
Version Description
2 Inclusion of the tables of the financial statements in the body of thenotes to the financial statements.
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Contents
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Company Data / Capital Breakdown
Number ofShares
Last Financial Year
(thousand) 12/31/2013
Issued Capital
Common 702,524
Preferred 0
Total 702,524
Treasury stock
Common 0
Preferred 0
Total 0
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Individual Financial Statements / Balance Sheet - Assets
(Thousands of Reais)
AccountCode
Account Description Last Financial Year12/31/2013
PenultimateFinancial Year
12/31/20121 Total Assets 4,751,985 3,642,481
1.01 Current Assets 141,241 234,244
1.01.01 Cash and Cash Equivalents 110,156 206,263
1.01.01.01 Cash and Bank deposits 509 260
1.01.01.02 Fundo Multimercado MPX 63 109,647 206,003
1.01.06 Recoverable Taxes 25,701 22,068
1.01.06.01 Current Taxes Recoverable 25,701 22,068
1.01.08 Other Current Assets 5,384 5,913
1.01.08.03 Other 5,384 5,913
1.01.08.03.01 Other Advances 1,175 820
1.01.08.03.02 Dividends Receivable 0 2,040
1.01.08.03.03 Gain on derivatives 4,171 3,018
1.01.08.03.04 Escrow Deposits 38 35
1.02 Noncurrent Assets 4,610,744 3,408,237
1.02.01 Long-Term Assets 1,464,405 1,170,867
1.02.01.06 Deferred Taxes 0 114,400
1.02.01.06.01 Deferred Income and Social Contribution Taxes 0 114,400
1.02.01.09 Other Noncurrent Assets 1,464,405 1,056,467
1.02.01.09.04 Escrow Deposits 0 102,649
1.02.01.09.07 Recoverable Taxes 7,215 9,598
1.02.01.09.08 Accounts receivable from other related parties 217,337 1,134
1.02.01.09.09 AFAC at Subsidiaries and Joint Ventures 206,678 419,426
1.02.01.09.10 Prepaid expense 841 841
1.02.01.09.11 Loan at Subsidiaries and Joint Ventures 909,327 505,976
1.02.01.09.12 Accounts receivable from Subsidiaries and Joint Ventures 123,005 16,364
1.02.01.09.13 Embedded derivatives 0 479
1.02.01.09.14 Other Accounts Receivable 2 0
1.02.02 Investments 3,130,978 2,215,107
1.02.02.01 Equity Interests 3,130,978 2,215,107
1.02.02.01.01 Interests in Associated Companies 51,899 31,861
1.02.02.01.02 Interests in Subsidiaries 2,181,366 1,373,392
1.02.02.01.03 Interests in Joint Ventures 835,618 747,759
1.02.02.01.04 Other Equity Interests 62,095 62,095
1.02.03 Property, plant and equipment 12,634 19,343
1.02.04 Intangible assets 2,727 2,920
PAGE: 4 of 54
Individual Financial Statements / Balance Sheet - Liabilities
(Thousands of Reais)
Individual Financial Statements / Balance Sheet - Liabilities
(Thousands of Reais)
AccountCode
Account Description Last Financial Year12/31/2013
PenultimateFinancial Year12/31/2012
2 Total Liabilities 4,751,985 3,642,481
2.01 Current Liabilities 1,580,010 947,342
2.01.01 Social and labor obligations 8,424 3,288
2.01.01.02 Labor Obligations 8,424 3,288
2.01.02 Trade payables 3,473 3,849
2.01.02.01 Domestic Trade Payables 3,473 3,849
2.01.03 Tax Obligations 709 402
2.01.03.01 Federal Tax Liabilities 709 402
2.01.03.01.01 Income taxes and contributions payable 709 402
2.01.04 Loans and Financing 1,562,323 924,463
2.01.04.01 Loans and Financing 1,562,211 924,352
2.01.04.01.01 In local currency 1,562,211 924,352
2.01.04.02 Debentures 112 111
2.01.04.02.02 Interest 112 111
2.01.05 Other Obligations 5,081 15,340
2.01.05.01 Related-Party Transactions 0 6,523
2.01.05.01.02 Debts with Subsidiaries 0 3,859
2.01.05.01.04 Debts with Other Related Parties 0 2,664
2.01.05.02 Other 5,081 8,817
2.01.05.02.07 Profit Sharing 4,990 8,726
2.01.05.02.09 Other Obligations 91 91
2.02 Noncurrent Liabilities 703,232 125,547
2.02.01 Loans and Financing 660,656 107,129
2.02.01.01 Loans and Financing 655,417 102,175
2.02.01.01.01 In local currency 655,417 102,175
2.02.01.02 Debentures 5,239 4,954
2.02.01.02.01 Principal 4,605 4,605
2.02.01.02.02 Interest 634 349
2.02.02 Other Obligations 34,489 0
2.02.02.01 Related-Party Transactions 34,489 0
2.02.02.01.04 Debts with Other Related Parties 34,489 0
2.02.04 Provisions 8,087 18,418
2.02.04.02 Other Provisions 8,087 18,418
2.02.04.02.05 Negative Equity 8,087 18,418
2.03 Shareholders’ Equity 2,468,743 2,569,592
2.03.01 Realized Capital 4,532,313 3,731,734
2.03.02 Capital Reserves 350,514 321,904
2.03.02.04 Options Awarded 350,514 321,904
2.03.05 Retained Earnings/Accumulated Losses -2,360,800 -1,364,979
2.03.06 Equity Appraisal Adjustments -53,284 -119,067
PAGE: 5 of 54
Individual Financial Statements – Statement of Income
(Thousands of Reais)
AccountCode
Account Description Last Financial Year1/1/2013 to 12/31/2013
Penultimate FinancialYear 1/1/2012 to12/31/2012
3.04 Operating Income/Expenses -607,282 -398,826
3.04.02 General and Administrative Expenses -123,701 -154,317
3.04.02.01 Personnel and Management -67,579 -78,347
3.04.02.02 Other Expenses -7,908 -6,391
3.04.02.03 Outsourced Services -40,401 -59,983
3.04.02.04 Depreciation and Amortization -2,280 -1,535
3.04.02.05 Leasing and Rentals -5,533 -8,061
3.04.04 Other Operating Income 1,096 1
3.04.05 Other Operating Expenses -15,498 -14,390
3.04.05.01 Unsecured Liability -8,272 -14,362
3.04.05.02 Provision for investment losses 3 2
3.04.05.03 Losses on the sale of assets -7,229 -30
3.04.06 Equity in Net Income of Subsidiaries -469,179 -230,120
3.05 Earnings before financial income/loss and tax -607,282 -398,826
3.06 Financial Income/Loss -220,773 -62,096
3.06.01 Financial Revenue 112,823 142,842
3.06.01.01 Exchange Variance Gain 12,528 3,205
3.06.01.02 Interest-earning bank deposits 94,632 65,324
3.06.01.03 Derivative Financial Instruments 2,728 5,592
3.06.01.04 Fair value of debentures -479 62,482
3.06.01.05 Other Financial Revenue 3,414 6,239
3.06.02 Financial Expenses -333,596 -204,938
3.06.02.01 Derivative Financial Instruments -27,625 -1,561
3.06.02.02 Exchange Variance Loss -6,142 -4,156
3.06.02.03 Debenture Interest/Cost -786 -130,864
3.06.02.05 Debt Charges -147,857 -46,230
3.06.02.06 Other Financial Expenses -82,372 -22,127
3.06.02.07 Financial Advisory Services -68,814 0
3.07 Earnings before tax on net income -828,055 -460,922
3.08 Income and social contribution taxes on profit -114,400 25,720
3.08.02 Deferred charges -114,400 25,720
3.09 Net Income from Continued Operations -942,455 -435,202
3.11 Net Income/Loss for the Period -942,455 -435,202
3.99 Earnings per Share - (Reais / Share)
3.99.01 Basic Earnings per Share
3.99.01.01 Common 3.51822 -0.75263
3.99.02 Diluted Earnings per Share
3.99.02.01 Common 3.61822 -0.75263
PAGE: 6 of 54
Individual Financial Statements – Comprehensive Statement of Income
(Thousands of Reais)
AccountCode
Account Description Last Financial Year1/1/2013 to 12/31/2013
Penultimate FinancialYear 1/1/2012 to12/31/2012
4.01 Net income for the period -942,455 -435,202
4.02 Other Comprehensive Income -61,914 -47,397
4.02.01 Accumulated Translation Adjustments -54,404 -43,260
4.02.03 Effective portion of the changes in fair value of cashflow hedges - hedge accounting
-11,379 -6,268
4.02.04 Deferred income and social contribution taxes - hedgeaccounting
3,869 2,131
4.03 Comprehensive Income for the Period -1,004,369 -482,599
PAGE: 7 of 54
Individual Financial Statements / Statement of Cash Flows -Indirect Method(Thousands of Reais)
AccountCode
Account Description Last Financial Year 1/1/2013to 12/31/2013
Penultimate FinancialYear 1/1/2012 to12/31/2012
6.01 Net Cash from Operating Activities -597,119 -49,748
6.01.01 Cash Provided by Operating Activities -159,957 -57,045
6.01.01.01 Loss for the Year -828,055 -460,921
6.01.01.02 Depreciation and Amortization 2,280 1,535
6.01.01.03 Equity in net income of subsidiary and associatedcompanies
469,179 230,120
6.01.01.04 Operations with derivative financial instruments 3,414 -4,031
6.01.01.05 Stock Options Awarded 28,610 47,279
6.01.01.08 Provision for Unsecured Liabilities 8,272 14,363
6.01.01.13 Debenture Interest/Cost 786 130,864
6.01.01.14 Fair value of debentures 479 -62,482
6.01.01.15 Interest on loans and related parties 147,857 46,230
6.01.01.16 Provision for investment losses -3 -2
6.01.01.18 Other 7,224 0
6.01.02 Changes in Assets and Liabilities -437,162 7,297
6.01.02.01 Other Advances -359 1,318
6.01.02.02 Prepaid Expenses 0 -635
6.01.02.05 Recoverable Taxes -1,249 33,304
6.01.02.09 Taxes, Duties and Contributions 307 302
6.01.02.10 Trade payables -375 2,551
6.01.02.11 Provisions and payroll charges 5,136 -1,098
6.01.02.12 Accounts Payable 0 16
6.01.02.14 Debts / Credits with related parties -275,232 -6,407
6.01.02.17 Other Assets and Liabilities -21,299 -9,498
6.01.02.18 Payment of Financial Charges -144,091 -12,556
6.02 Net Cash from Investment Activities -1,481,836 -1,741,423
6.02.01 Acquisition of PPE and intangible assets -2,602 -417
6.02.04 Change in Investments -1,180,570 -1,213,567
6.02.07 Debt to related parties -403,351 -481,803
6.02.08 Dividends 2,040 322
6.02.10 Escrow Deposits 102,647 -45,958
6.03 Net Cash from Financing Activities 1,982,848 1,037,176
6.03.01 Financial Instruments -4,567 20,302
6.03.02 Capital Increase 800,579 2,431,907
6.03.07 Obtainment of loans and financings 2,117,336 886,568
6.03.08 Principal payment -930,000 0
6.03.10 Debenture Issue -500 -1,559,414
6.03.13 Adjustment Spin-off CCX Carvão da Colômbia 0 -742,187
6.05 Increase (Decrease) in Cash and Cash Equivalents -96,107 -753,995
6.05.01 Opening Balance of Cash and Cash Equivalents 206,263 960,258
6.05.02 Closing Balance of Cash and Cash Equivalents 110,156 206,263
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
Individual Financial Statements - Statements of Changes in Shareholders’ Equity - 1/1/2013 to 12/31/2013
(Thousands of Reais)
AccountCode
Account Description
Opening Balances
Paid-in share capital Capital Reserves,Options Awarded andTreasury Stock
321,904
ProfitReserves
Retained Earningsor AccumulatedLosses
-
OtherComprehensiveIncome
-
Shareholders’ Equity
5.01 Opening Balances 3,731,734 321,904 0 1,364,97 119,067 2,569,592
5.03 Adjusted Opening Balances 3,731,734 321,904 0 1,364,97 119,067 2,569,592
5.04 Capital Transactions with Partners 800,579 28,610 0 0 0 829,189
5.04.01 Capital Increases 800,579 0 0 0 0 800,579
5.04.03 Awarded Options Recognized 0 28,610 0 0 0 28,610
5.05 Total Comprehensive Income 0 0 0 -995,821 65,783 930,038
5.05.02 Other Comprehensive Income 0 0 0 -995,821 65,783 930,038
5.05.02.01 Financial Instrument Adjustments 0 0 0 0 11,379 11,379
5.05.02.04 Translation Adjustments in the Period 0 0 0 -53,366 54,404 1,038
5.05.02.07 Loss for the period 0 0 0 -942,455 0 -942,455
5.07 Closing Balances 4,532,313 350,514 0 2,360,80 53,284 2,468,743
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
Individual Financial Statements - Statements of Changes in Shareholders’ Equity - 1/1/2012 to 12/31/2012
(Thousands of Reais)
AccountCode
Account Description
Opening Balances
Paid-in share capital Capital Reserves,Options Awarded and
Treasury Stock
321,904
ProfitReserves
Retained Earningsor Accumulated
Losses
-1,364,979
OtherComprehensive Income
-
Shareholders’ Equity
5.01 Opening Balances 2,042,014 274,625 0 -927,169 71,670 1,317,800
5.03 Adjusted Opening Balances 2,042,014 274,625 0 -927,169 71,670 1,317,800
5.04 Capital Transactions with Partners 1,689,720 47,2 0 -2,608 10,821 1,723,570
5.04.01 Capital Increases 2,431,907 0 0 0 0 2,431,907
5.04.03 Awarded Options Recognized 0 47,2 0 0 0 47,279
5.04.08 Adjustment Spin-off CCX Carvão da -742,187 0 0 2,845 10,821 750,163
5.04.09 Adjustment Deferred Asset - MPX E.ON 0 0 0 -5,453 0 5,453
5.05 Total Comprehensive Income 0 0 0 -435,202 36,576 471,778
5.05.02 Other Comprehensive Income 0 0 0 -435,202 36,576 471,778
5.05.02.01 Financial Instrument Adjustments 0 0 0 0 4,137 4,137
5.05.02.04 Translation Adjustments in the Period 0 0 0 0 32,439 32,439
5.05.02.07 Loss for the Period 0 0 0 -435,202 0 435,202
5.07 Closing Balances 3,731,734 321,904 0 -1,364,979 119,067 2,569,592
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
PAGE: 9 of 54
Individual Financial Statements – Statement of Added Value
(Thousands of Reais)
Account Code Account Description Last Financial Year 1/1/2013to 12/31/2013
Penultimate FinancialYear 1/1/2012 to
12/31/2012
7.02 Consumables acquired from third parties -45,220 -65,848
7.02.02 Material, Energy, Outsourced Services and Other -45,220 -65,848
7.03 Gross Added Value -45,220 -65,848
7.04 Retentions -2,280 -1,535
7.04.01 Depreciation, Amortization and Depletion -2,280 -1,535
7.05 Net Added Value Produced -47,500 -67,383
7.06 Transferred Added Value -377,153 -104,844
7.06.01 Equity in Net Income of Subsidiaries -469,179 -230,120
7.06.02 Financial Revenue 100,295 139,637
7.06.03 Other -8,269 -14,361
7.06.03.02 Provision for Unsecured Liabilities -8,272 -14,363
7.06.03.05 Provision for investment devaluation 3 2
7.07 Total Added Value to be Distributed -424,653 -172,227
7.08 Distribution of Added Value -424,653 -172,227
7.08.01 Personnel 67,579 78,346
7.08.01.01 Direct Remuneration 46,638 57,788
7.08.01.02 Benefits 11,487 13,446
7.08.01.03 F.G.T.S. 9,454 7,112
7.08.02 Taxes, Duties and Contributions 117,004 -25,624
7.08.02.01 Federal 117,004 -25,624
7.08.03 Interest Expenses 333,219 210,253
7.08.03.01 Interest 786 130,863
7.08.03.02 Rent 5,533 8,061
7.08.03.03 Other 326,900 71,329
7.08.03.03.01 Losses on Derivative Transactions 6,142 1,561
7.08.03.03.03 Insurance 486 430
7.08.03.03.04 Exchange Variance 15,097 952
7.08.03.03.06 Financial Expenses 306,272 68,386
7.08.03.03.07 Other -1,097 0
7.08.04 Interest earnings -942,455 -435,202
7.08.04.03 Retained Earnings/Loss for the Period -942,455 -435,202
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
PAGE: 10 of 54
Consolidated Financial Statements / Balance Sheet - Assets
(Thousands of Reais)
AccountCode
Account Description Last Financial Year12/31/2013
Penultimate FinancialYear
12/31/2012
1 Total Assets 9,689,212 8,039,596
1.01 Current Assets 747,842 765,908
1.01.01 Cash and Cash Equivalents 277,582 519,277
1.01.01.01 Cash and Bank deposits 16,493 5,922
1.01.01.02 Fundo Multimercado MPX 63 202,444 513,355
1.01.01.04 CDB 58,645 0
1.01.02 Short-term Investments 0 3,441
1.01.02.01 Short-term investments valued at Fair Value 0 3,441
1.01.02.01.03 Securities 0 3,441
1.01.03 Accounts Receivable 294,396 21,345
1.01.03.01 Trade accounts receivable 294,396 21,345
1.01.04 Inventories 78,376 142,687
1.01.06 Recoverable Taxes 47,651 37,410
1.01.06.01 Current Taxes Recoverable 47,651 37,410
1.01.07 Prepaid Expenses 9,825 19,351
1.01.08 Other Current Assets 40,012 22,397
1.01.08.03 Other 40,012 22,397
1.01.08.03.01 Other Advances 5,001 1,783
1.01.08.03.03 Gain on Derivatives 4,171 3,018
1.01.08.03.04 Escrow Deposits 38 35
1.01.08.03.05 CCC subsidies receivable 30,802 17,561
1.02 Noncurrent Assets 8,941,370 7,273,688
1.02.01 Long-Term Assets 966,682 654,098
1.02.01.06 Deferred Taxes 302,327 305,548
1.02.01.06.01 Deferred Income and Social Contribution Taxes 302,327 305,548
1.02.01.07 Prepaid Expenses 2,905 8,494
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
PAGE: 11 of 54
1.02.01.09 Other Noncurrent Assets 661,450 340,056
1.02.01.09.04 Escrow Deposits 118,606 135,648
1.02.01.09.05 CCC Subsidies Receivable 0 24,617
1.02.01.09.07 Recoverable Taxes 14,614 24,034
1.02.01.09.08 Accounts receivable from other related parties 218,680 1,134
1.02.01.09.09 AFAC at joint ventures 150 12,425
1.02.01.09.11 Loan with joint ventures 191,968 134,926
1.02.01.09.12 Accounts receivable from joint ventures 117,372 6,793
1.02.01.09.13 Embedded derivatives 0 479
1.02.01.09.14 Other Accounts Receivable 60 0
1.02.02 Investments 941,853 833,955
1.02.02.01 Equity Interests 941,853 833,955
1.02.02.01.01 Interests in Associated Companies 51,899 31,861
1.02.02.01.04 Other Equity Interests 889,954 802,094
1.02.03 Property, plant and equipment 6,819,454 5,570,399
1.02.04 Intangible assets 213,381 215,236
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
PAGE: 12 of 54
Consolidated Financial Statements / Balance Sheet - Liabilities
(Thousands of Reais)
AccountCode
Account Description Last Financial Year12/31/2013
Penultimate FinancialYear 12/31/2012
2 Total Liabilities 9,689,212 039,596
2.01 Current Liabilities 2,978,859 2,109,465
2.01.01 Social and labor obligations 16,770 9,863
2.01.01.02 Labor Obligations 16,770 9,863
2.01.02 Trade payables 331,216 115,261
2.01.02.01 Domestic Trade Payables 331,216 115,261
2.01.03 Tax Obligations 45,934 7,241
2.01.03.01 Federal Tax Liabilities 45,934 7,241
2.01.03.01.01 Income taxes and contributions payable 45,934 7,241
2.01.04 Loans and Financing 2,408,254 820,085
2.01.04.01 Loans and Financing 2,408,142 819,974
2.01.04.01.01 In local currency 2,408,142 819,974
2.01.04.02 Debentures 112 111
2.01.04.02.02 Interest 112 111
2.01.05 Other Obligations 176,685 157,015
2.01.05.01 Related-Party Transactions 0 30,772
2.01.05.01.03 Debits with Parent Companies 0 26,783
2.01.05.01.04 Debts with Other Related Parties 0 3,989
2.01.05.02 Other 176,685 126,243
2.01.05.02.04 Losses on Derivative Transactions 0 22,951
2.01.05.02.05 Contractual Retentions 84,789 77,374
2.01.05.02.07 Profit Sharing 8,148 20,633
2.01.05.02.08 Dividends Payable 0 1,960
2.01.05.02.09 Other Obligations 83,748 3,325
2.02 Noncurrent Liabilities 4,136,480 3,228,993
2.02.01 Loans and Financing 3,807,617 109,760
2.02.01.01 Loans and Financing 3,802,378 104,806
2.02.01.01.01 In local currency 3,802,378 104,806
2.02.01.02 Debentures 5,239 4,954
2.02.01.02.01 Principal 4,605 4,605
2.02.01.02.02 Interest 634 349
2.02.02 Other Obligations 307,720 95,227
2.02.02.01 Related-Party Transactions 307,720 430
2.02.02.01.04 Debts with Other Related Parties 307,720 430
2.02.02.02 Other 0 94,797
2.02.02.02.03 Losses on Derivative Transactions 0 94,797
2.02.03 Deferred Taxes 9,591 2,048
2.02.03.01 Deferred Income and Social Contribution Taxes 9,591 2,048
2.02.04 Provisions 11,552 21,958
2.02.04.02 Other Provisions 11,552 21,958
2.02.04.02.04 Provision for Disassembly 2,266 2,118
2.02.04.02.05 Unsecured Liability 9,286 19,840
2.03 Consolidated Shareholders’ Equity 2,573,873 2,701,138
2.03.01 Realized Capital 4,532,313 3,731,734
2.03.02 Capital Reserves 350,514 321,904
2.03.02.04 Options Awarded 350,514 321,904
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
PAGE: 13 of 54
Consolidated Financial Statements / Balance Sheet - Liabilities
(Thousands of Reais)
AccountCode
Account Description Last Financial Year
12/31/2013
PenultimateFinancial Year12/31/2012
2.03.05 Retained Earnings/Accumulated Losses -2,379,303 -1,384,971
2.03.06 Equity Appraisal Adjustments -53,284 -119,067
2.03.09 Minority Interests 123,633 151,538
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
PAGE: 14 of 54
Consolidated Financial Statements – Statement of Income
(Thousands of Reais)
AccountCode
Account Description Last Financial Year1/1/2013 to 12/31/2013
Penultimate FinancialYear 1/1/2012 to12/31/2012
3.01 Revenue from goods sold and services rendered 1,438,831 48,786
3.02 Cost of goods and/or services sold -1,507,047 -50,949
3.03 Gross Profit -68,216 -2,163
3.04 Operating Income/Expenses -358,957 -404,708
3.04.02 General and Administrative Expenses -167,261 -231,026
3.04.02.01 Personnel and Management -79,762 -111,440
3.04.02.02 Other Expenses -12,323 -12,411
3.04.02.03 Outsourced Services -64,803 -92,139
3.04.02.04 Depreciation and Amortization -3,125 -2,788
3.04.02.05 Leasing and Rentals -7,248 -12,248
3.04.04 Other Operating Income 4,424 1,208
3.04.05 Other Operating Expenses -43,108 -16,787
3.04.05.01 Unsecured Liability -7,717 -14,671
3.04.05.02 Provision for investment losses -23 -1,237
3.04.05.03 Losses on the sale of assets -7,231 -879
3.04.05.05 Write-off of CCC Benefit -24,617 0
3.04.05.06 Other -3,520 0
3.04.06 Equity in Net Income of Subsidiaries -153,012 -158,103
3.05 Earnings before financial income/loss and tax -427,173 -406,871
3.06 Financial Income/Loss -506,096 -90,459
3.06.01 Financial Revenue 88,513 -249,822
3.06.01.01 Exchange Variance Gain 15,346 25,086
3.06.01.02 Interest-earning bank deposits 63,707 76,599
3.06.01.03 Derivative Financial Instruments 2,728 -422,684
3.06.01.04 Fair value of debentures -479 62,482
3.06.01.05 Other Financial Revenue 7,211 8,695
3.06.02 Financial Expenses -594,609 159,363
3.06.02.01 Derivative Financial Instruments -33,745 -16,479
3.06.02.02 Exchange Variance Loss -3,339 398,638
3.06.02.03 Debenture Interest/Cost -786 -130,863
3.06.02.05 Debt Charges -364,832 -47,248
3.06.02.06 Other Financial Expenses -123,093 -44,685
3.06.02.07 Financial Advisory Services -68,814 0
3.07 Earnings before tax on net income -933,269 -497,330
3.08 Income and social contribution taxes on profit -11,152 62,876
3.08.01 Current -3,744 -1,921
3.08.02 Deferred charges -7,408 64,797
3.09 Net Income from Continued Operations -944,421 -434,454
3.11 Consolidated Net Income/Loss for the Period -944,421 -434,454
3.11.01 Attributed to Partners of the Parent Company -942,455 -435,202
3.11.02 Attributed to Minority Partners -1,966 748
3.99 Earnings per Share - (Reais / Share)
3.99.01 Basic Earnings per Share
3.99.01.01 Common -3.52556 -0.75263
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
PAGE: 15 of 54
3.99.02 Diluted Earnings per Share
3.99.02.01 Common -3.52556 -0.75263
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
PAGE: 16 of 54
Consolidated Financial Statements – Comprehensive Statement of Income
(Thousands of Reais)
AccountCode
Account Description Last Financial Year1/1/2013 to 12/31/2013
Penultimate FinancialYear1/1/2012 to 12/31/2012
4.01 Consolidated Net Income for the Period -944,421 -434,454
4.02 Other Comprehensive Income -61,914 -47,397
4.02.01 Accumulated Translation Adjustments -54,404 -43,260
4.02.03 Effective portion of the changes in fair value of cash flowhedges - hedge accounting
-11,379 -6,268
4.02.04 Deferred income and social contribution taxes - hedgeaccounting
3,869 2,131
4.03 Consolidated Comprehensive Income for the Period -1,006,335 -481,851
4.03.01 Attributed to Partners of the Parent Company -1,004,369 -482,599
4.03.02 Attributed to Minority Partners -1,966 748
DFP - Standardized Financial Statements - 12/31/2013 - ENEVA S.A. Version : 2
PAGE: 17 of 54
Consolidated Financial Statements / Statement of Cash Flows – Indirect Method
(Thousands of Reais)
AccountCode
Account Description Last Financial Year1/1/2013 to 12/31/2013
Penultimate FinancialYear1/1/2012 to 12/31/2012
6.01 Net Cash from Operating Activities -510,869 -455,668
6.01.01 Cash Provided by Operating Activities -205,894 -127,546
6.01.01.01 Loss for the Year -933,269 -497,330
6.01.01.02 Depreciation and Amortization 146,539 8,811
6.01.01.03 Equity in net income of subsidiary and associatedcompanies
153,012 158,103
6.01.01.04 Operations with derivative financial instruments 611 24,046
6.01.01.05 Stock Options Awarded 28,610 47,279
6.01.01.07 Investment devaluation 23 1,237
6.01.01.08 Provision for Unsecured Liabilities 7,717 14,671
6.01.01.09 Provision for Disassembly 149 0
6.01.01.13 Debenture Interest/Cost 786 130,864
6.01.01.14 Fair value of debentures 479 -62,475
6.01.01.15 Interest on loans and related parties 364,832 47,248
6.01.01.19 Write-off of CCC Subsidy 24,617 0
6.01.02 Changes in Assets and Liabilities -304,975 -328,122
6.01.02.01 Other Advances -3,218 6,633
6.01.02.02 Prepaid Expenses 15,115 -12,609
6.01.02.03 Accounts Receivable -273,051 135
6.01.02.05 Recoverable Taxes -821 56,371
6.01.02.06 Inventory 64,311 -84,497
6.01.02.09 Taxes, Duties and Contributions 38,693 -10,697
6.01.02.10 Trade payables 215,956 -39,216
6.01.02.11 Provisions and payroll charges 6,908 -6,266
6.01.02.12 Accounts Payable 80,423 -45,396
6.01.02.13 CCC Subsidies Receivable -13,241 -12,732
6.01.02.14 Debts / Credits with related parties -24,824 1,231
6.01.02.17 Other Assets and Liabilities -51,027 -30,284
6.01.02.20 Payments of Financial Charges -360,199 -150,795
6.02 Net Cash from Investment Activities -1,572,611 -1,845,554
6.02.01 Acquisition of PPE and intangible assets -1,275,962 -1,159,848
6.02.03 Securities 3,440 5,996
6.02.04 Change in Investments -260,087 -537,456
6.02.05 Cash resulting from sale of property, plant and equipmentand intangible assets
0 -310
6.02.07 Debt to related parties -57,042 -134,245
6.02.10 Escrow Deposits 17,040 -19,691
6.03 Net Cash from Financing Activities 1,841,786 1,440,348
6.03.01 Financial Instruments -119,512 7,949
6.03.02 Capital Increase 800,579 1,689,720
6.03.04 Payment of dividends and interest on shareholders’ equity -1,961 0
6.03.07 Loans and Financing Obtained 2,562,932 2,064,982
6.03.10 Debenture Issue -500 -1,559,414
6.03.14 Principal payment -1,399,752 -762,889
6.05 Increase (Decrease) in Cash and Cash Equivalents -241,694 -860,874
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6.05.01 Opening Balance of Cash and Cash Equivalents 519,277 1,380,151
6.05.02 Closing Balance of Cash and Cash Equivalents 277,583 519,277
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Consolidated Financial Statements - Statements of Changes in Shareholders’ Equity - 1/1/2013 to 12/31/2013
(Thousands of Reais)
AccountCode
Account Description Paid-in sharecapital
CapitalReserves,OptionsAwarded and
ProfitReserves
RetainedEarnings orAccumulatedLosses
OtherComprehensiveIncome
Shareholders’Equity
Minorityinterests
ConsolidatedShareholders’Equity
5.01 Opening Balances 3,731,734 321,904 0 1,384,971 -119,067 2,549,600 151,538 2,701,138
5.03 Adjusted OpeningBalances
3,731,734 321,904 0 -1,384,971 -119,067 2,549,600 151,538 2,701,138
5.04 Capital Transactionswith Partners
800,579 28,610 0 1,489 0 830,678 0 830,678
5.04.01 Capital Increases 800,579 0 0 0 0 800,579 0 800,579
5.04.03 Awarded OptionsRecognized
0 28,610 0 0 0 28,610 0 28,610
5.04.09 Deferred AssetAdjustment
0 0 0 1,489 0 1,489 0 1,489
5.05 Total ComprehensiveIncome
0 0 0 -995,821 65,783 -930,038 -27,904 -957,942
5.05.02 Other ComprehensiveIncome
0 0 0 -995,821 65,783 -930,038 -27,904 -957,942
5.05.02.01 Financial InstrumentAdjustments
0 0 0 0 11,379 11,379 0 11,379
5.05.02.04 Translation Adjustmentsin the Period
0 0 0 -53,366 54,404 1,038 0 1,038
5.05.02.07 Loss for the period 0 0 0 -942,455 0 -942,455 -1,966 -944,421
5.05.02.08 Minority interest 0 0 0 0 0 0 -25,938 -25,938
5.07 Closing Balances 4,532,313 350,514 0 -2,379,303 -53,284 2,450,240 123,634 2,573,874
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Consolidated Financial Statements - Statements of Changes in Shareholders’ Equity - 1/1/2012 to 12/31/2012
(Thousands of Reais)
AccountCode
Account Description Paid-in sharecapital
CapitalReserves,OptionsAwarded and
ProfitReserves
RetainedEarnings orAccumulatedLosses
OtherComprehensiveIncome
Shareholders’Equity
Minorityinterests
5.03 Adjusted Opening Balances 2,042,014 274,625 0 -970,896 -71,670 1,274,073 96,086 1,370,159
5.04 Capital Transactions with Partners 1,689,720 47,279 0 20,469 0 1,757,468 0 1,757,468
5.04.01 Capital Increases 1,689,720 0 00 0 1,689,720 0 1,689,720
5.04.03 Awarded Options Recognized 0 47,279 00 0 47,279 0 47,279
5.04.08 Adjustment Spin-off CCX Carvão daColômbia
0 0 0 2,845 0 2,845 0 2,845
5.04.09 Adjustment Deferred Asset - MPXE.ON Participações
0 0 0 17,624 0 17,624 0 17,624
5.05 Total Comprehensive Income 0 0 0 -434,544 -47,397 -481,941 55,452 -426,489
5.05.02 Other Comprehensive Income 0 0 0 -434,544 -47,397 -481,941 55,452 -426,489
5.05.02.01 Financial Instrument Adjustments 0 0 00 -4,137 -4,137 0 -4,137
5.05.02.04 Translation Adjustments in the Period 0 0 0 658 -43,260 -42,602 0 -42,602
5.05.02.07 Loss for the Period 0 0 0 -435,202 0 -435,202 748 -434,454
5.05.02.08 Minority interest 0 0 00 0 0 54,704 54,704
5.07 Closing Balances 3,731,734 321,904 0 -1,384,971 -119,067 2,549,600 151,538 2,701,138
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Consolidated Financial Statements – Statement of Added Value
(Thousands of Reais)
Account Code Account Description Last Financial Year1/1/2013 to 12/31/2013
Penultimate FinancialYear1/1/2012 to 12/31/2012
7.01 Revenue 2,686,031 1,604,487
7.01.01 Sales of Goods, Products and Services 1,438,831 48,786
7.01.03 Revenue relating to construction of companyassets
1,247,200 1,555,701
7.02 Consumables acquired from third parties -1,213,964 -142,567
7.02.02 Material, Energy, Outsourced Services andOther
-1,213,964 -142,567
7.03 Gross Added Value 1,472,067 1,461,920
7.04 Retentions -146,539 -8,811
7.04.01 Depreciation, Amortization and Depletion -146,539 -8,811
7.05 Net Added Value Produced 1,325,528 1,453,109
7.06 Transferred Added Value -122,925 -449,782
7.06.01 Equity in Net Income of Subsidiaries -153,012 -158,103
7.06.02 Financial Revenue 73,167 -274,909
7.06.03 Other -43,080 -16,770
7.06.03.02 Provision for Unsecured Liabilities -7,717 -14,672
7.06.03.04 Losses on the sale of assets -7,203 -861
7.06.03.05 Provision for investment devaluation -23 -1,237
7.06.03.06 Other -28,137 0
7.07 Total Added Value to be Distributed 1,202,603 1,003,327
7.08 Distribution of Added Value 1,202,603 1,003,327
7.08.01 Personnel 120,553 115,441
7.08.01.01 Direct Remuneration 61,977 64,803
7.08.01.02 Benefits 33,971 33,279
7.08.01.03 F.G.T.S. 24,605 17,359
7.08.02 Taxes, Duties and Contributions 14,411 -61,959
7.08.02.01 Federal 14,411 -61,959
7.08.03 Interest Expenses 2,012,060 1,384,299
7.08.03.01 Interest 786 130,863
7.08.03.02 Rent 172,152 13,046
7.08.03.03 Other 1,839,122 1,240,390
7.08.03.03.01 Losses on Derivative Transactions 3,339 -398,638
7.08.03.03.02 Advances to suppliers 1,247,201 1,555,702
7.08.03.03.03 Insurance 17,841 1,199
7.08.03.03.04 Exchange Variance 18,399 -8,607
7.08.03.03.06 Financial Expenses 556,738 91,926
7.08.03.03.07 Other -4,396 -1,192
7.08.04 Interest earnings -944,421 -434,454
7.08.04.03 Retained Earnings/Loss for the Period -942,455 -435,202
7.08.04.04 - Minority interests in retained earnings -1,966 748
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